The Signalling Effect of HRM on
Psychological Contracts of EmployeesWhat are the drivers of high performing organizations? During thelast decade, the contribution of HRM to organizational performancehas dominated HRM research and practice. Employees and their rela-tionship with the organization take central stage in this perspectivesince HRM aims to contribute to organizational performance whileoptimizing the relationship between employees and the organiza-tion. However, HRM research has failed to empirically establish thisrelationship.This study fills this important void in HRM research by empiricallyinvestigating the relevance of HRM for the employee-organizationrelationship. In doing so, this study ‘bridges’ two streams of HRMresearch: organizational level research on HRM and performance andindividual level research on employee work perceptions and behavi-oral performance. We focus our attention on the concept of thepsychological contract. The psychological contract is defined as: “anindividual’s belief, shaped by the organization, regarding reciprocalobligations”. The psychological contract connects organizationallevel and individual level perspectives because of its focus on theexchange relationship between organization and the individual.Based on a sample of 49 organizations with 2099 individual respon-dents we investigated the signalling value of HRM for employees’assessment of the degree of violation of their psychological contracts,using a multi-level analytical technique. The findings indicate thatthere is a significant relationship between HRM, organizationaldesign factors and the degree of perceived psychological contractviolation. These findings provide us with one of the first empiricalindications on how HRM leads to effectiveness.
ERIMThe Erasmus Research Institute of Management (ERIM) is the ResearchSchool (Onderzoekschool) in the field of management of the ErasmusUniversity Rotterdam. The founding participants of ERIM are RSMErasmus University and the Erasmus School of Economics. ERIM wasfounded in 1999 and is officially accredited by the Royal NetherlandsAcademy of Arts and Sciences (KNAW). The research undertaken byERIM is focussed on the management of the firm in its environment,its intra- and inter-firm relations, and its business processes in theirinterdependent connections. The objective of ERIM is to carry out first rate research in manage-ment, and to offer an advanced graduate program in Research inManagement. Within ERIM, over two hundred senior researchers andPh.D. candidates are active in the different research programs. From avariety of academic backgrounds and expertises, the ERIM communityis united in striving for excellence and working at the forefront ofcreating new business knowledge.
www.erim.eur.nl ISBN 90-5892-119-0
MARIËLLE SONNENBERG
The Signalling Effect ofHRM on PsychologicalContracts of EmployeesA multi-level perspective
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The Signalling Effect of HRM on Psychological Contracts of Employees A multi-level perspective
Erasmus Research Institute of Management (ERIM) RSM Erasmus University / Erasmus School of Economics Erasmus University Rotterdam Internet: http://www.erim.eur.nl ERIM Electronic Series Portal: http://hdl.handle.net/1765/1 ERIM Ph.D. Series Research in Management, 86 ISBN-10: 90-5892-119-0 ISBN-13: 978-90-5892-119-2 Design: B&T Ontwerp en advies www.b-en-t.nl / Print: Haveka www.haveka.nl © 2006, Mariëlle Sonnenberg All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the author.
The Signalling Effect of HRM on Psychological Contracts of Employees A multi-level perspective
Het signaal effect van HRM op psychologische contracten van medewerkers
Een multi-level benadering
Proefschrift
ter verkrijging van de graad van doctor aan de Erasmus Universiteit Rotterdam
op gezag van de Rector Magnificus Prof.dr. S.W.J. Lamberts
en volgens besluit van het College voor Promoties.
De openbare verdediging zal plaatsvinden op donderdag 12 oktober om 16:00 uur
door Mariëlle Sonnenberg
Geboren te Zwolle
Promotiecommissie Promotor: Prof.dr. J. Paauwe Copromotor: Dr. B.A.S. Koene Overige leden: Prof.dr. R.E. Peccei
Prof.dr. D.N. den Hartog Prof.dr. R.J.D. Schalk
VOORWOORD (PREFACE IN DUTCH)
Waarom ben ik ook alweer aan dit proefschrift begonnen? Omdat ik nieuwsgierig was.
Omdat ik mij verwonderde over hoe weinig vernieuwend er in het vakgebied organisatie de
afgelopen 100 jaar geschreven was. Omdat mijn onderzoek wel nieuw zou zijn! Om te
leren. Hoe meer onderzoek ik deed, hoe minder ik wist. Een fascinerend proces dat me
nieuwe idolen heeft gebracht (zoals Von Clausewitz, Weick, Minztberg, Becker en
Huselid) en me mijn familie en vrienden nog meer heeft leren waarderen.
Mijn eerste leermeesters, Frits Gosselink en Piet Moerman, ben ik erg dankbaar
aangezien zij me indirect hebben aangezet tot het schrijven van dit proefschrift. Beiden zijn
zij zeer inspirerende mensen die ieder op hun manier een bijzondere invloed op mijn
ontwikkeling hebben gehad.
Al zou ik het graag anders zien, ik vrees dat ik in dit proces vooral last van mezelf heb
gehad. Wellicht is de grootste overwinning dan ook die op mijzelf (met wat medische
hulp). Ik heb me behoorlijk afgereageerd op de mensen in mijn directe omgeving. Dat zij
er nog steeds zijn, stelt me gerust. Ik ben hen veel dank schuldig.
Mijn promotoren, Jaap Paauwe en Bas Koene, hebben heel wat met me te stellen
gehad. Hun tomeloze inzet heeft mij op de rails gehouden. Gelukkig hebben we ook
ontzettend veel plezier gehad.
Ik wil ook de leden van mijn Kleine Commissie bedanken voor hun inspanningen -
Deanne den Hartog, Riccardo Peccei en Rene Schalk. Ze hebben mij geholpen om de lijn
van mijn betoog aan te scherpen. Ook de overige leden van mijn commissie wil ik
bedanken voor hun bereidheid deel te nemen aan de ceremonie – Philip Dewe en Luc Sels.
Mijn paranimfen zijn heel bewust gekozen. Judie is mijn steun en toeverlaat geweest
afgelopen jaren. We hebben ontzettend veel plezier gehad en zo veel meegemaakt dat het
lijkt alsof we een leven lang hebben gedeeld. Jan is degene die me gedurende het gehele
proces op alle mogelijke manieren heeft gesteund. Zijn ambitie werkte aanstekelijk. Zonder
zijn vertrouwen in mij had ik het waarschijnlijk een stuk zwaarder gehad.
Eigenlijk heeft iedereen waar ik de afgelopen jaren mee heb samengewerkt of
gesproken zijn bijdrage geleverd. Een aantal mensen zou ik hier graag speciaal noemen.
Frits Kluytmans van de Open Universiteit ben ik veel dank verschuldigd voor de
dataverzameling. Paul Boselie wil ik bedanken voor zijn bereidheid tot sparren, hij is een
groot voorbeeld voor mij. Jan de Kok, tja wat had ik zonder de hulp van Jan de Kok
gemoeten? Ik denk met veel plezier terug aan de mensen die onderdeel zijn geweest van de
Vakgroep Organisatie, zoals Daina, Joke, Tulay, Jos, Truus, Janneke, Ton, Ludwig,
Deanne, Anne, Norman en Alice.
Zonder Sammy (Sandra) was het erg zwaar geweest. Van de gesprekken met Arnoud
heb ik erg genoten. Bedankt voor jullie vriendschap, hulp en vrolijkheid. Met enkele van
de studenten die ik in de loop van de jaren heb ontmoet heb ik geweldig samengewerkt,
zoals Mark, Ilja en Maartje. Ik heb veel van hen geleerd.
De afleiding die het schrijven van de wortel voor de Gids voor Personeelsmanagement
heeft geboden was zeer welkom (met dank aan Ton en Mariëtte). Het heeft mij veel
inspiratie gegeven voor mijn onderzoek.
Wat ik vreselijk zal missen zijn de hysterische (en natuurlijk zeer leerzame)
congressen. Dat ERIM dit mogelijk heeft gemaakt is geweldig!
Tegenwoordig werk ik met veel plezier bij Accenture. Een aantal van mijn collega’s
wil ik graag speciaal bedanken voor hun steun en inspiratie: Jeroen, AdJan, Martin, Anil,
Arjen, Arjan, Susanne en Inge.
Door te leren verander je. Mijn vrienden hebben me ervoor behoed een ongelooflijke
nerd te worden, met speciale dank aan Marianne, Leonore, Mariëlle, Dennis, Rob, Gerbert,
Danny, Jaap, Lucie en Aaron. Met dank aan de liefde van en de liefde in mijn leven.
Bedankt voor jullie steun, hulp en flexibiliteit. Ik prijs me gelukkig met zulke vrienden.
De onvoorwaardelijke steun van mijn moeder, mijn lieve zus Heriëtte en broer Colijn,
Pa, Anny, Erna, Peter, Bianca, Jack, Jacques, Helga, alle nichtjes en neefjes, mijn nicht
Gita, Ab-Willem en tante Annie heeft me overweldigd. Zonder hen had ik dit niet
volbracht. Ik heb het getroffen!
Ik vraag me niet meer af waarom ik hieraan begonnen ben. Ik ben blij dat ik aan dit
proefschrift ben begonnen. Ik ben dankbaar dat ik dit heb mogen volbrengen. Ik ben trots
op hetgeen ik heb geleerd en dankbaar voor de mensen die me hierin gesteund en
geïnspireerd hebben. Ik brand van nieuwsgierigheid want realiseer me dat ik zo weinig
weet en er nog zo veel te leren is. Dit voelt als een mooi begin.
Tot slot: Gras groeit niet door eraan te trekken. Dank voor ieders begrip hiervoor.
Mariëlle Sonnenberg
Rotterdam, augustus 2006
CHAPTER 1 INTRODUCTION ..................................................... 1
1.1 Introduction .......................................................................................................... 1
1.2 Research question................................................................................................. 3
1.3 Empirical Data...................................................................................................... 5
1.4 Relevance............................................................................................................... 5
1.5 Overview of the chapters ..................................................................................... 6
CHAPTER 2 PSYCHOLOGICAL CONTRACT ............................ 7
2.1 Introduction .......................................................................................................... 7
2.2 Defining the psychological contract .................................................................... 7
2.2.1 Development of the concept ............................................................................... 10
2.2.2 Who or what represents the organization ........................................................ 14
2.3 Underlying theory and concepts........................................................................ 16
2.4 Fulfillment, breach and violation ...................................................................... 21
2.5 Variables influencing the psychological contracts........................................... 24
2.5.1 Individual level variables ................................................................................... 24
2.5.2 Organizational level characteristics.................................................................. 25
2.6 Conclusions ......................................................................................................... 30
CHAPTER 3 HRM SIGNALS .....................................................35
3.1 Introduction ........................................................................................................ 35
3.2 Defining structural signals................................................................................. 35
3.2.1 The signalling perspective: what does signalling mean?................................. 36
3.2.2 A signalling role for HRM and organizational structure................................ 39
3.2.3 Conceptual model ............................................................................................... 41
3.3 Domains of Human Resource Management..................................................... 42
3.4 Models/ approaches for studying HRM............................................................ 44
3.4.1 Universalistic approaches .................................................................................. 46
3.4.2 Amount of HRM practices................................................................................. 46
3.4.3 The focus of HRM .............................................................................................. 47
3.4.4 Configurational approaches .............................................................................. 53
3.4.5 Configurational approach of this study............................................................ 60
3.5 Conclusion........................................................................................................... 65
CHAPTER 4 RESEARCH DESIGN.............................................69
4.1 Introduction ........................................................................................................ 69
4.2 Analysis of data at multiple levels ..................................................................... 69
4.3 Analytical strategy.............................................................................................. 71
4.4 Data collection method....................................................................................... 74
4.5 Individual level measurement: psychological contract ................................... 76
4.6 Organizational level measurement: HRM, structure and context ................. 80
4.6.1 Measures of organizational structure ............................................................... 80
4.6.2 Measurement of context..................................................................................... 83
4.6.3 Measures of HRM............................................................................................... 84
4.7 Control variables ................................................................................................ 90
4.9 Conclusions ......................................................................................................... 91
CHAPTER 5 RESULTS...............................................................93
5.1 Introduction ........................................................................................................ 93
5.3 The empty model ................................................................................................ 96
5. 4 Baseline models................................................................................................. 100
5.5 Random intercept model 1............................................................................... 102
5.6 Random intercept model 2............................................................................... 105
5.7 Random intercept model 3: Configurations................................................... 108
5.8 General model comparisons ............................................................................ 109
5.9 Conclusions ....................................................................................................... 113
CHAPTER 6 DISCUSSION...........................................................115
6.1 Introduction ...................................................................................................... 115
6.2 Summary of main findings .............................................................................. 116
6.2.1 Research model and hypotheses...................................................................... 116
6.2.2 Main results....................................................................................................... 120
6.3 Discussion of the findings................................................................................. 126
6.5 Strengths, limitations and suggestions for further research......................... 131
6.6 Suggestions for practice ................................................................................... 135
SAMENVATTING (SUMMARY IN DUTCH) ..................................139
REFERENCES ..............................................................................145
APPENDIX 1: CHECK FOR RANDOM SLOPES .........................161
APPENDIX 3A: MODELS WITH DEPENDENT VARIABLE PERCEIVED EMPLOYEE OBLIGATIONS ...................................163
APPENDIX 3B: MODELS WITH DEPENDENT VARIABLE PERCEIVED OBLIGATIONS ORGANIZATION ...........................164
APPENDIX 4: DESCIRPTIVE STATISTICS AND CORRELATIONS OF THE MAIN VARIABLES OF INTEREST .................................165
Chapter 1 – Introduction
1
CHAPTER 1 INTRODUCTION
1.1 Introduction
What are the drivers of high performing organizations? This question is central in
contemporary management research and practice (e.g. Kirby, 2005) and is important for
research in Human Resource Management (HRM).
In organizational level HRM research, the relationship between HRM and
organizational performance has increasingly become a matter of interest, as can be seen in
the numerous articles and books on High Performance Work Systems (e.g. Appelbaum et
al., 2000) and the rising interest in “HR scorecards” (e.g. Becker et al., 2001; Paauwe,
2004). However, according to authors in this field (see for instance Delery, 1998; Delaney
& Huselid, 1996) we know little about the mechanisms through which HRM influences
organizational performance.
Individual level HRM performance research mainly focuses on analyses of the
relationship between characteristics of individual employees, their work perceptions and
behavioral aspects of performance such as intention to leave the organization and
employee satisfaction (e.g. Herriot & Pemberton, 1997; Rousseau, 1995/1998; Guest,
1998).
In this study we ‘bridge’ both streams of HRM research, organizational level research
towards the relationship between HRM and performance and individual level research on
the relationship between work perceptions and individual performance. We bridge these
two streams of research by focusing our attention on the concept of the psychological
contract. The psychological contract is defined as: “an individual’s belief, shaped by the
organization, regarding reciprocal obligations”. The psychological contract consists of
three aspects: perceived employee obligations; perceived employer obligations; and
perceived fulfillment/ violation of employer obligations.
Chapter 1 – Introduction
2
The concept of the psychological contract connects organizational level and individual
level HRM research because of its focus on the exchange relationship between
organization and individual. The psychological contract is of interest because of its effects
on attitudes and behavior of organizational members.
For an organization to achieve desired performance goals, violations and fulfillment of
employees’ psychological contracts are important factors. We use the term violation for
indicating a situation in which employees perceive the obligations of the employer as not
being completely fulfilled. Violation of the psychological contract has been empirically
linked to individual’s attitudes and behaviors, such as for instance trust, loyalty,
commitment and intention to leave (e.g. McLean Parks & Schmedeman, 1994; Robinson &
Rousseau, 1994; Robinson & Morrison, 1995; Ten Brink et al., 2001).
We consider organizational practices such as HRM practices and elements of
organizational structure as communicating mechanisms. We investigate if these
organizational practices send signals that are relevant for employees’ assessment of the
degree of violation of their psychological contracts.
The psychological contract will be the factor against which we evaluate effectiveness of
HRM and more general design factors as organizational structure. We investigate to what
extent two approaches towards HRM (universalistic and configurational) are helpful to
understand the relationship between the signals an organization sends and employee
perceptions of their employment relationship.
Insight is gained into the connections between HRM, organizational structure, context
factors and psychological contracts, thereby exploring the relationship between
organizational and individual level elements and the process by or through which this
might lead to organizational effectiveness.
Chapter 1 – Introduction
3
1.2 Research question
The goal of this research is to gain more insight into the relationship between HRM and
performance by studying the signalling effect of HRM on employees’ assessment of their
psychological contracts. HRM and more general design factors as organizational structure
and context are seen as structural signals: “vehicles people use to convey commitments and
offer inducements for present and future behavior”. HRM is the subset of organizational
design characteristics that is most closely related to the employment relationship.
We assume that signalling exists when the organization is perceived by employees as
sending signals. It thus assumes interaction between both parties as a result of the way an
organization designs HRM. Signalling in this way is considered to be a characteristic of the
organization that influences the attitudes and behavior of the employee (employees’
assessment of degree of the degree of psychological contract violation).
The main research question is characterized as follows:
What is the signalling value of HRM for employees’ assessment of the degree of violation
of their psychological contracts?
In line with Beer et al. (1984) we defined HRM as “involving all management decisions
that affect the relationship between the organization and employees – its human
resources”. Based on the work of Rousseau (1989/1990/1995) we defined psychological
contract as “an individual’s belief, shaped by the organization, regarding reciprocal
obligations”.
This main question raises a number of related questions that have to be answered in
order to explore the relationship between organizational level HRM and individual level
psychological contracts. In order to gain more clarity on the construct of the psychological
contract, we first need to answer the following questions (chapter 2):
How is the psychological contract defined?
Which variables (at organizational and individual level) have been related to the
psychological contract in previous research?
Chapter 1 – Introduction
4
Considering the signalling effect of HRM practices on employees’ perceptions of the
employment relationship asks for a specific reading of our present understandings of the
influence of HRM in organizations. Minimal signalling is necessary for employees to be
able to build any view of their employment relationship at all. An increase in the amount of
organizational information may provide richer information for the employee to build his
own understanding of his employment relationship with the organization. The first
approach we consider is, therefore, a universalistic approach in that regardless of its
context, an increase the amount of (commitment oriented) HRM practices has a
relationship with employees’ assessment of their psychological contracts
Coherent organizational signalling could also be important. Alignment between
different ‘signals’ or messages send by an organization, and alignment among HRM
practices, may be important for constituting organizationally ‘desired’ behavior. The
configurational approach focuses on alignment or fit, and is the second approach we
consider in this study.
In order to study the relationship between the signalling value of HRM and
psychological contracts, we need to investigate (chapter 3):
The meaning of signalling
Universalistic and configurational approaches towards HRM
Because our concepts of interest are situated at different levels (individual level
psychological contract violation and organizational level HRM), we need theory on
studying the interactions between multiple levels. Therefore, we need to gain insight into
(chapter 4):
Theory and models for analysis of data at multiple levels
Insight gained from these three streams of literature form the building blocks of our
research model, investigating our main question concerning the signalling value of HRM
for employees’ assessment of the degree of violation of their psychological contracts (see
figure 1-1).
Chapter 1 – Introduction
5
Figure 1-1 Building blocks of this study
1.3 Empirical Data
Because our main focus concerns relationships between variables at two levels of
analysis, on individual level psychological contract violation and on organizational level
HRM, we collected data that has a nested structure and use an analytical strategy typically
for handling such data (i.e. multi-level analysis). The empirical data is based on survey
research derived from employers and employees within a variety of organizations. In
general, survey research is aimed at exploring ‘what’ and ‘how much’ (Yin, 1994) is the
relationship between the variables of interest. A standard questionnaire has been
distributed among groups of employees in a variety of organizations. The questionnaire
measures individual level work attitudes and perceptions of the employment relationship.
Besides these questionnaires, the HRM manager of each organization characterized his/her
organization on a number of predefined dimensions using a standard protocol. In total we
collected data from 49 organizations and 2099 employees within these organizations.
1.4 Relevance
Both literature on organizational level HRM and performance and individual level
research on the relationship between psychological contracts and employee behavior, point
to the existence of a relationship between HRM and (violation of) psychological contracts
of employees. Most of these indications, however, are conceptually based.
Signalling theory, models for studying the relationship between HRM and performance
Exchange theory, notions of balance and reciprocity
Theory/ models
Organization/ employer
HRM (and more general design factors as structure)
Organizational level
Multilevel modelling and analysisMethodology
EmployeePerspective
Psychological contract of employees
Subject
Individual level
Signalling theory, models for studying the relationship between HRM and performance
Exchange theory, notions of balance and reciprocity
Theory/ models
Organization/ employer
HRM (and more general design factors as structure)
Organizational level
Multilevel modelling and analysisMethodology
EmployeePerspective
Psychological contract of employees
Subject
Individual level
Chapter 1 – Introduction
6
Present individual level theorizing doesn’t give insight in organizational variables that
influence the psychological contract, thus leaving a gap between organizational HRM
theory and individual level psychological contract theory.
A major and unique strength of this study is that it combines insights on organizational
level HRM with insights on individual level psychological contracts. The multi-level
approach of our study is of major scientific relevance. Rousseau already argued in 1985 for
the importance of building and testing multi-level models in research on organizations.
Nowadays authors like Ostroff & Bowen (2000) argue that especially in the area of HRM
multi-level models are needed. Furthermore, this study focuses on a diverse set of
employees within a variety of organizations and should, therefore, be able to present a
good indication of the employee’s perceptions of their employment relationship.
The managerial relevance of this research rests in the insight we provide into ways of
influencing psychological contracts. It is in the interest of managers to have a clear
knowledge of which organizational activities will elicit those attitudes and behaviors
necessary to achieve the organizational goals.
1.5 Overview of the chapters
In chapter 2 we investigate the concept of the psychological contract and the influence
of organizational- and individual level variables on the psychological contract. In chapter 3
we provide insight into and evaluate existing literature on HRM and more general design
factors (structural signals) and their relationship with psychological contract violation. We
discuss approaches for studying HRM and develop our conceptual model and hypotheses
in chapter 3. In chapter 4 we operationalize the conceptual model and hypotheses presented
in chapter 3. We present our analytical strategy, the design of the study and our research
model. In chapter 5 we present the results of our study by testing our hypotheses, leading
us to answering our main research question. In chapter 6 we discuss the results of our
study, and present limitations and suggestions for further research as well as the
recommendations for practice.
Chapter 2 - Psychological Contract
7
CHAPTER 2 PSYCHOLOGICAL CONTRACT
2.1 Introduction
In this study the psychological contract is put forward as a framework for investigating
the relationship between organizational variables, such as HRM, and the employment
relationship. The psychological contract is defined as: “an individual’s belief, shaped by
the organization, regarding reciprocal obligations”. The purpose of this chapter is to
investigate the concept of the psychological contract and the relationship of organizational-
and individual level variables with the psychological contract.
In the first section we give a brief historical overview of the development of the
psychological contract until now and discuss the definition of the concept (section 2.2).
Furthermore, in this section we consider the issue of who or what represents the
organization, which is critical in conceptually distinguishing between the psychological
contract on individual level and organizational level variables influencing this concept. In
section 2.3 attention is given to underlying theory and concepts. A great deal of research
has focused on the aftermath or evaluation of psychological contracts and their
consequences for individual performance. Reasons for this are indications that the degree
of psychological contract fulfillment, breach and violation has substantive consequences
for the behavior of employees. The insights gained from this type of research will be
discussed in section 2.4. Section 2.5 provides an overview of individual and organizational
elements influencing the development and evaluation of the psychological contract,
providing the basis for the following chapters.
2.2 Defining the psychological contract
In general, employment contracts serve to bind together individuals and organizations
and regulate their behavior, making possible the achievement of organizational goals
(Robinson et al., 1994).
Employment contracts aim to connect the employee with the employer or organization
with regard to future contributions and inducements of the parties involved in the contract.
Chapter 2 - Psychological Contract
8
These contributions and inducements are partly put on paper in the written formal contract
of employment, but are for the most part unwritten and implicitly held.
Spindler (1994) argues that “in law, contracts create and define enforceable rights and
obligations between parties who knowingly create the relationship”. Legal and
psychological contracts are both important aspects of the employment relationship. The
difference between legal and psychological contracts is that legal contracts are specified,
explicitly defined, in contrast to psychological contracts, which are unwritten, are held
individually and which are perceptual in nature.
Researchers on the psychological contract focus their attention within the employment
relationship on perceived expectations, obligations and promises regarding future
inducements and contributions. The basic idea behind this kind of work is that employees
develop a psychological contract with their employer based on their formal contract as
well as many other formal and informal organizational signals and individual
characteristics, and this formed psychological contract influences their behavior.
The psychological contract is nowadays a well-known concept for most researchers in
the fields of Organizational Behavior and Human Resource Management. During the past
years a relatively high amount of attention has been given to the concept of the
psychological contract, with a surge of attention in the 1990’s. Interest in the psychological
contract started in 1960 with a publication of Argyris. In the first period (1960-1991) only
a small amount of attention was paid to the subject. During the period 1994-2004
psychological contract became frequently a subject of publication, with special issues in
1994 (Human Resource Management), 1998 (Journal of Organizational Behavior) and
2002 (Gedrag & Organisatie). Interestingly, it was not until 1989 with the seminal work of
Denise Rousseau that the psychological contract became a popular concept to perform
research on. Commonly mentioned is that this rise in attention towards the psychological
contract was due to changes in the employment relationship. According to Coyle-Shaprio
et al. (2002), interest in the psychological contract emerged during, or partly as a
consequence of a period of organizational restructuring and downsizing in the USA.
Chapter 2 - Psychological Contract
9
As a result of amongst others a rise in global competition, more intense product market
competition, changes in ownership of organizations, the growing use of contingent
employment, developments of technology and production techniques (e.g. Blyton &
Turnbull, 1994) and the changing nature of the relationships between employers and
employees. It is argued that employment relationships are evolving into less stable, more
complex relationships, with a variety of contract forms for similar work (which will be
partly discussed in section 2.3). Anderson & Schalk (1998) presented an overview of
factors influencing the growth in psychological contract research (figure 2-2).
Figure 2-2 Factors influencing the growth in psychological contract research (Anderson
& Schalk, 1998: 643)
As a result of these changes, the perception of the employment relationship became
increasingly a matter of interest. Focusing on perceptions, the psychological contract has,
therefore, been put forward as a framework for studying the perceptions of employment
relationships (e.g. Shore & Tetrick, 1994; Herriot et al., 1997; Shore & Tetrick, 1994;
Guest, 1998). There is, however, debate about the proper definition of the concept, which
we will discuss in the following subsection.
• Downsizing• Globalization of markets• Flexibilisation of labour
contracts• New technology• Segregation of ‘core’ and
‘peripheral’ labour markets• Outsourcing and sub-contracting
of work functions• Flexible forms of
work organization
• Redundancy• Job insecurity• Flexible working patters• Temporary, fixed term
and zero- hours contracts of employment
• Fragmented, cross-function career trajectories
• Market driven reskilling and retraining imperatives in order to retain future employability
Growth of research
interest into the
psychological contract
Environmental, and organisational level factors Individual level factors
Chapter 2 - Psychological Contract
10
2.2.1 Development of the concept
Two studies can be seen as the founding “fathers” of the psychological contract
concept: the work of Argyris (1960) and the work of Levinson et al. (1962). Argyris
(1960) first introduced the term psychological contract. In describing the relationship
between employees and the leadership style of their foremen, he pointed at the informal
culture as the important factor in the understanding of the agreement between the
employees and their foremen, i.e. the psychological contract. According to Argyris (1960),
the management of the employee-foreman relationship was “dominated” by the
psychological contract. He defined violation of this psychological contract as the result of
a situation in which the foreman behaved in contrast with the cultural norms. Argyris
(1960) described the psychological contract as the perceptions by two parties of their
employment relationship and as a mutual understanding on the content of these perceptions
or the psychological contract.
Levinson et al. (1962) described the psychological contract as a series of mutual
expectations between the organization and the employee, some of which are conscious and
other unconsciously held. Levinson et al. (1962) focused at expectations having to do with
psychological needs, such as growth and aggression and expectations having to do with
specific aspects of the work itself, such as job security and rewards.
Both definitions assume an exchange relationship between employer (organization
and/or leader) and employee, in which the expectations of both parties involved are taken
into consideration.
Rousseau (1989) introduced a definition of the psychological contract from the
individual’s point of view: “An individual's belief regarding the terms and conditions of a
reciprocal exchange agreement between the focal person and another party (typically
between employee and employer)”. Rousseau breaks with the work of Levinson et al.
(1962) and Argyris (1960), by shifting to the individual level (instead of the relational
level).
Chapter 2 - Psychological Contract
11
In 1990 Rousseau published an article called ‘new hire perceptions of their own and
their employer's obligations: A study of psychological contracts’. In this article she
formulated the following definition of psychological contract: “an individual’s beliefs
regarding reciprocal obligations”. In this definition, one could notice a shift from
expectations to obligations (see also Roehling (1997) for an extensive historical overview).
Rousseau’s (1989/1990) definitions take into account the fact that both parties do not
necessarily have to agree with regard to the terms of the psychological contract, in contrast
to Argyris’ (1960) ‘mutual understanding’. Instead, Rousseau considers mutuality as
perceived by individual employees. Furthermore, she focuses on the conscious beliefs by
employees, where Levinson et al. (1962) also consider unconscious expectations.
In 1995 Rousseau formulated the following definition of psychological contract:
“individual beliefs, shaped by the organization, regarding the terms of an exchange
agreement between individuals and their organizations”. This definition differs from the
one formulated by Rousseau in 1989 and 1990, in that although the words ‘individual
beliefs’ are still present in the definition, they are extended by using the new fragment
‘shaped by the organization’. This could be an indication for more emphasis on the
elements that shape a psychological contract, and a narrowing of the interest towards only
these elements that are manageable by an organization. Hereby she excludes the influence
of personal characteristics and the (social) background of these individuals. All these
Rousseau’s definitions, however, imply that she sees the psychological contract as a
construct at the individual level.
In contemporary literature roughly two schools can be distinguished. On the one hand
the ‘Rousseau-school’ (with authors like Rousseau, Robinson, Morrison, McLean Parks,
Kraatz, Greller, Guzzo, Noonan, Lewis-McClear & Taylor, Schalk), which mainly focuses
on the individual employee, and, on the other hand, the ‘traditional school’ that focuses on
both sides, the employer and the employee (e.g. Guest, Herriot, Pemberton, Coyle-Shapiro,
Manning, Kidd).
Chapter 2 - Psychological Contract
12
At present there is only a relatively small group of researchers that actually examine
the employers’ side of the psychological contract in terms of the traditional-school
definition of the concept (e.g. Coyle-Shapiro & Kessler, 2000; Guest & Conway, 2002;
Coyle-Shapiro, 2001).
Lewis-McClear and Taylor (1998:3) argue that “only by studying the interactions
between these two parties, and the way these interactions evolve over time, can we begin
to understand the essence of the employment exchange”. Therefore, one contribution of
including the employer’s perspective is that it provides a more complete picture by
allowing an investigation of the actions and reactions of both parties to the exchange.
When studying this matter, it becomes important to establish the boundaries of the
psychological contract, and consider the question if the psychological contract resides
solely in the individual or that both the employer and the individual are part of the
psychological contract. Furthermore, the question who or what represents the organization
or the employer’s perspective is important to gain insight into. There is a vividly debate on
this matter, which we will discuss in more detail in subsection 2.2.2.
A variety of elements have been used in definitions of the psychological contract,
ranging from expectations, beliefs, promises, obligations and perceptions (Conway, 1996;
Guest, 1998). According to Rousseau (1990:309), psychological contracts differ from the
more general concept of expectations in that contracts are promissory and reciprocal,
offering a commitment to some behavior on the part of the employee, in return for some
action on the part of the employer or the other way around (as can be captured in the words
‘reciprocal promised based obligations’).
This focus on promised-based obligations is very typical of Rousseau’s later
conceptualizations. Obligations can be defined as “beliefs held by an employee or
employer, that each is bound by promise or debt to an action or course of action in
relation to the other party” (Robinson, Kraatz & Rousseau, 1994).
Chapter 2 - Psychological Contract
13
According to most researchers within the Rousseau line of reasoning, if a perceived
obligation is not accompanied by the belief that a promise has been conveyed (e.g. if the
perceived obligation is based for instance on past experience in other employment
relationships) then it falls outside the psychological contract (McLean Parks &
Schmedemann, 1994; Rousseau & Greller, 1994; Shore & Tetrick, 1994).
Robinson (1996) found in her study support for the use of obligations instead of
expectations. She provides us with indications that fulfillment of psychological contract
obligations contributes more substantively to the prediction of outcome variables as trust,
satisfaction and commitment than expectations do (which are non-promissory in nature).
Subsequently, only those expectations that stem from perceived promises made by the
employer are considered by most researchers as part of the psychological contract (in line
with Rousseau). Although promises regarding future courses of action express intent, it is
not what the promise maker intends but what the receiver perceives (Rousseau, 1995).
Communication is thus the essence of a promise, promises are perceptions of what was
sent and meant (Rousseau, 1995: 27).
So a lot of debate in this field is due to the divergent use of definitions of the
psychological contract. The most frequently used definitions are the definitions of
Rousseau (1989/1990/1995). According to Rousseau (1989) individuals can have
psychological contracts and organizations cannot: organizations provide the context in
which individuals create psychological contracts. In order to be able to conceptually
distinguish between the psychological contract on individual level and organizational level
variables influencing this concept (which could be seen as the employer’s perspective), we
will study the psychological contract in line with the conceptualizations of Rousseau.
We define the psychological contract as: “an individual’s belief, shaped by the
organization, regarding reciprocal obligations”. The psychological contract consists of
three elements: perceived employee obligations, perceived employer (organization’s)
obligations and perceived fulfillment/violation of employer obligations (Robinson et al.,
1994; Schalk & Freese, 1997).
Chapter 2 - Psychological Contract
14
In the following subsection we provide more insight into the matter of who or what
represents the organization in the light of the psychological contract debate.
2.2.2 Who or what represents the organization
As stated before, there is a lot of debate going on regarding the issue of the employer’s
or organization’s perspective1. Researchers suggested several contract makers as
representatives of the organizations’ point of view. One way of capturing the
organization’s perspective is as Coyle-Shapiro (2001) suggested through the lens of the
manager. Coyle-Shapiro & Kessler (2002) for instance, examined the relationship between
employer and employee, in which they suggest that the organization’s perspective can best
be represented by a higher level manager.
Guest & Conway (2000), however, suggest that not all managers can be seen as
representing the organization’s point of view in the eyes of employees: line managers are
not perceived (by both managers as well as employees) as representing the organization,
unless the line manager is a senior manager. For this reason Guest & Conway (2002) used
in their study senior managers to represent the organization’s point of view. In the
qualitative part of their research (interviews in four organization with 80 managers and
staff at different levels) they found that senior managers were seen by the interviewed as
agents representing the organization. But, then again, there were different views of what
defined seniority, which seemed to depend on the seniority of the respondent, “a junior
staff member might identify a head of department in this role, while more senior staff,
themselves in management positions, were more likely to identify someone at board level.”
According to Rousseau (1995), the organizational part of the psychological contract
may consist of multiple agents (as owner, top management, co-worker, managers etc).
Especially in large organizations it seems difficult for employees to interpret who or what
represents the employers’ perspective. Rousseau (1995) makes the distinction between
primary and secondary contract makers (see figure 2-3).
1 In this study, employer and organization are used interchangeable
Chapter 2 - Psychological Contract
15
Primary contract makers are people. Secondary contract makers are ‘structural signals:
vehicles people use to convey commitments and offer inducements for present and future
behavior”. In this line of reasoning elements of organizational design (including structure
and HRM) can be considered as ‘contract makers’, or representing the organization’s point
of view.
Figure 2-3 Contract makers (Rousseau, 1995:63)
Following this model of Rousseau (1995), considering the perceptions of managers as
representing the organization’s point of view is indeed problematic, since they (whatever
level) do not necessarily represent the whole picture of human contract makers: recruiters,
coworkers and mentors also interact with employees. Based on this model, several
elements in the organization can influence the psychological contract. Since it might be
problematic to capture all these elements or contract-makers at once, we have to decide on
the focus of our study.
Basically, this model of Rousseau (1995) suggests that employees are involved in at
least two exchanges. An organization can act through its agents but also through its
processes, systems and structure. In this sense, HRM has been regularly put forward as a
key aspect of the organization. Structural signals (Rousseau, 1995) may provide continuity
regardless of the variety of line and senior managers and HRM people acting as specific
agents (Robinson & Morrison, 1995: 290).
Through observation• Managers• Co-workers• Top management
Through interaction• Recruiters• Managers• Co-workers• Mentors
Human contract makers (primary contract makers)
Structural signals• Compensation• Benefits • Career path • Performance review• Training• Personnel manuals
Administrative contract makers (secondary contract makers)
Through observation• Managers• Co-workers• Top management
Through interaction• Recruiters• Managers• Co-workers• Mentors
Human contract makers (primary contract makers)
Structural signals• Compensation• Benefits • Career path • Performance review• Training• Personnel manuals
Administrative contract makers (secondary contract makers)
Chapter 2 - Psychological Contract
16
Support for this can be found in the work of Levinson (1965), who argues that people
project human qualities upon an organization, and relate to organizations in such a way as
if it had human qualities. He further argues that as a result of organizational policies,
similarity in behavior by different agents of the organization at different times and places
will be established. All together these insights clearly provide us with the argument for
investigating the influence of organizational features on employees instead of only those of
specific agents.
This model of Rousseau (1995), and our focus on structural signals, invites a more in
depth examination of the influence of organizational level elements such as organizational
structure and HRM on the psychological contract. In our definition of the psychological
contract, these organizational level aspects (which can be seen as part of the employers’
perspective) are not included in the psychological contract itself, but are expected to affect
the individual level psychological contract.
To study the relationship between organizational level elements or structural signals
and the psychological contract, we need to gain insight into the dynamics of the exchange
relationship between the organization and its employees. We thus need theoretical
foundations for studying the psychological contract and its relationship with these
organizational-level elements. This will be the focus of the following section.
2.3 Underlying theory and concepts
Exchange (Blau, 1964), reciprocity (Gouldner, 1960) and balance (Barksdale & Shore,
1995) are central concepts in the literature on employee-organization contracts (Rousseau,
1989/ 1990; Rousseau and McLean Parks, 1993). These concepts and the relationship with
the previous discussions on the psychological contract will be shortly discussed.
Exchange theory provides the basic foundation of the psychological contract. Two sorts
of exchanges can be distinguished, economic and social. Pure economic exchange exists in
the case where the employer offers short-term, purely economic inducements in exchange
for well-specified contributions by the employee (Tsui, et al., 1997).
Chapter 2 - Psychological Contract
17
According to Tsui et al. (1997) “At least for job complexity and external adaptation
reasons, the employer may find it advantageous to leave some obligations unspecified and
to treat the employment relationship as a combination of economic and social exchange,
rather than as a purely economic exchange”. Blau (1964) reasons that, although the formal
or legal relationship in employment is economically driven a social element to such
relationships typically evolves, since each party has a perception of the contract that they
have with each other. Such perceptions can be derived from direct or indirect
communication with the other party (primary and secondary contract makers in Rousseau’s
terminology).
Based on theory of social and economic exchange of Blau (1965), researchers on the
psychological contract make a distinction between transactional and relational
psychological contracts. Transactional psychological contracts are based on specific, close-
ended, easily definable and primarily economic transactions (focusing mainly on short
term and monetizable exchanges). Relational contracts consist of open-ended relationships
involving considerable investment by both employees and employers (social exchange):
“Relational contracts are more developmental and value-laden in nature” (Rousseau &
Parks, 1993).
The transactional/relational dimension of psychological contract has been studied
foremost in context of the interest in the ‘changing employment relationship” (see figure 2-
2). Anderson and Schalk (1998) for instance present an overview of past and emergent
forms of the 'typical' working relationship (table 2-1), representing a shift from relational
towards transactional elements in contracts.
Chapter 2 - Psychological Contract
18
Table 2-1 Past and emergent forms of working relationships (Anderson & Schalk,
1998) Characteristic Past form Emergent formFocus Security, continuity, loyalty Exchange, future employabilityFormat Structured, predictable, stable Unstructured, flexible, open to (re)negotiation
Underlying basis Tradition, fairness, social justice, socio-economic class
Market forces, saleable, abilities and skills, added value
Employer's responsibilities Continuity, job security, training, career prospects
Equitable(as perceived), reward for added value
Employee's responsibilities Loyalty, attendance, satisfactory performance, compliance with authority
Entrapreneurship, Innovation, enacting changes to improve performance, excellent performance
Contractual relations Formalized, mostly via trade union or collective representation
Individual's responsibility to barter for their services (internally or externally)
Career management Organization's responsibility, in-spiraling careers planned and facilitated through personnel department input
Individual's responsibility, out-spiraling careers by personal reskilling and retraining
Authors like Anderson & Schalk (1998) suggest that employment relationships are
increasingly based upon the possibilities of both parties in the market place and are getting
more transactional in nature. Herriot & Pemberton (1995) argue that due to a tendency to
pursue cost competitiveness, employers have generally become less committed to a
relational employment relationship.
In general it seems to be very difficult to (conceptually or empirically) come up with
psychological contracts that are only transactional or relational in essence and also other
differentiations between types of contracts seem to confirm the lack of support for a
changing relationship between employer and employee in general. The distinction
between transactional and relational obligations seems to be not so clearly cut, as can be
seen in the work of amongst others, Huiskamp & Schalk (2002), Guest & Conway (1997)
and Guest et al. (1996), who did not find clear support for the transition from relational
towards transaction psychological contract: ‘the traditional psychological contract built
around job security and career is still alive and surprisingly well”. Furthermore, the study
of Van den Brande et al. (2002) towards the state of the psychological contract in Belgium
provides indication for a limitation of this transition towards emergent forms of
employment relationships to a relatively small group of highly educated and young
professionals.
Chapter 2 - Psychological Contract
19
Guzzo & Noonan (1994) suggest that psychological contracts can have both
transactional and relational qualities, which can influence each other. Contracts have been
found that combine performance requirement of a transactional nature with long-term
investments between employee and employer characteristic of relational agreements
(Rousseau, 1995; Rousseau & Tijoriwala, 1996).
There seems to be not much evidence for the distinction between transactional and
relational contracts, or based on this distinction, for a new employment contract in which
there is supposed to be a shift from more relational elements to transactional elements.
A related aspect of the employment relationship that is considered to be of major
importance is (perceived) balance. In general the assumption is that employees feel obliged
to reciprocate in order to create (perceived) balance in the exchange with the organization.
Barksdale & Shore (1995) present a typology of exchange relationships based on
perceived balance, in which the level of obligation and degree of balance is taken into
account (see figure 2-5). To develop their typology they performed a clustering procedure,
in which individuals (327 part-time MBA students USA) were assigned to one of four
groups. They found that the mutual high and low obligations groups were most commonly
found, which gives support for the norm of reciprocity (Gouldner, 1960) and the notions of
Blau (1965) regarding social exchange; in that people seek balance in exchange
relationships and actions of one party thus have consequences for the actions of the other.
According to Blau (1964), balance in a relationship is expected as well as preferred.
There is balance when the employee perceives the employment relationship as consisting
of high levels or low levels of employee and employer obligations. According to Shore &
Barksdale (1998) although two forms of unbalance can be present (employee under and
over obligation), this might be a temporary unstable situation. Robinson et al. (1994),
provide support for this situation. Based on their longitudinal study, they found that
individuals may perceive some sort of unbalance when just hired (i.e. employee over-
obligation).
Chapter 2 - Psychological Contract
20
Figure 2-4 Typology Barksdale & Shore (1998)
Mutual low obligations
(N=119)
Employee under-obligation
(N=11)
Employee over obligation
(N=39)
Mutual high obligations
(N=146)
Employer obligations
Empl
oyee
obl
igat
ions
High
High
Moderate to low
Moderate to low
Over time, employees felt that the obligations towards them increased while their own
obligations decreased. According to Barksdale & Shore (1995) an explanation of the
unbalanced types could be that individuals tend to overestimate their own contributions
and underestimate the contributions of the other part. Employees can, therefore, feel they
owe the organization less, and the organization owes them more. This typology of
Barksdale & Shore provides us with insights in the relationship between perceived
employee and employer obligations.
In studying the psychological contract (economic and social) exchange, reciprocity and
balance are central phenomena. We discussed two ways of categorizing the psychological
contract (1) transactional and relational psychological contracts and (2) degree of balance
of psychological contracts. Although the most frequently used typology is the
transactional/relational one, as a consequence of the lack of empirical support, there has
been considerably critique on this distinction. Exchange theory suggests that the
relationship between an individual and organization is a result of mutual influence. In
order to study this interaction between the organization and the employee, we will use
insights derived from exchange theory, in that employees seek balance in their
employment relationship and reciprocate according to their perception of the degree of
balance.
Chapter 2 - Psychological Contract
21
Psychological contract obligations reflect future contributions and thus may or may not
be fulfilled and are thus contingent upon the perceived behavior of the other party. When
employees perceive that the obligations of the organization compared to their own
contributions are not fulfilled, they will reciprocate by adjusting their attitudes and
behavior.
Imbalance in the psychological contract has frequently been operationalized as
violation or breach of the contract. In the following section we evaluate previous research
investigating the impact of psychological contract violations on employee behavior.
2.4 Fulfillment, breach and violation
Evaluation of the psychological contract includes assessments of contract fulfillment,
breach and violation. There exists psychological contract fulfillment when the employer or
organization is perceived of keeping its contract terms. When an employee perceives the
organization has failed to fulfill one or more of the perceived obligations of the
psychological contract, there is a breach of contract. If there is a perceived breach of the
psychological contract and the breach is significant, it constitutes a violation (Morrison &
Robinson, 1997: 230): “Perceived breach refers to the cognition that one’s organization
has failed to meet one or more obligations within one’s psychological contract in a
manner commensurate with one’s contributions. Violation is the emotional and affective
state that may, under certain conditions, follow from the belief that one’s organization has
failed to adequately maintain the psychological contract”.
According to these authors, breach does not necessarily have to lead to violation, but
this depends for instance on the value of the perceived breach item, the context
surrounding the breach and the reason for the breach. Insight into the degree of fulfillment,
breach and violation of the psychological contract and their causes is important in light of
their different consequences for employee behavior. Researchers found a relationship
between psychological contract breach and civic virtue, intentions to remain, intention to
turnover and psychological withdrawal (Robinson, 1996; Bunderson, 2001; Kickul, Lester
& Finkl, 2002; Lo & Aryee, 2003).
Chapter 2 - Psychological Contract
22
Furthermore, research indicated a relationship between psychological contract violation
and neglect, intention to quit, satisfaction, organizational citizenship behavior, turnover,
intention to remain, loyalty and voice (Robinson & Rousseau, 1994; Robinson & Wolfe
Morrison, 1995; Lewis-McClear & Taylor, 1996; Turnley & Feldman, 1998/1999/2000;
De Witte & Van Hecke, 2002; Tekleab & Taylor, 2003).
Prior research has come up with somewhat inconsistent results regarding the extent to
how extensive the issue of breach/violation is, or how many employees experienced
psychological contract violation (Turnley & Feldman, 1999b). Robinson & Rousseau
(1994) for instance reported that approximately 55 % of a sample of MBA graduates
indicated violation within the first two years of employment. Some researchers
acknowledge that violations are quite common in today’s workplace. In the study of
Robinson & Rousseau (1994), violation was conceptualized as perceived having to
fulfilled less than was promised on at least one element of the psychological contract,
which is in other studies considered as perceived breach.
Turnley & Feldman (1998) reported that approximately 25 % of their respondents
reported violation, which is substantive lower. These results might have been influenced
by the use of different measures, or operationalizations of psychological contract violation.
First of all, not al researchers make this distinction between breach and violation this strict,
and label situations of breach (failed to fulfill one or more obligations) as violations.
Regarding the measurement of violation or breach, Turnley & Feldman (1998) have
asked the overall extent to which the organization has kept its promises and obligations.
Respondents might, in that case, be more positive, indicating the influence of the
measurement used. An example of such a measurement of violation is the following
question: “overall, how well has the organization fulfilled the commitments that were made
to you when you were hired?” (Rousseau, 1994). Furthermore, Turnley & Feldman (2002)
argue that when an employer is perceived as over-fulfilling its obligations (i.e. more than
perceived to be promised), this could as well be perceived as violation, although there is no
substantive research on this matter.
Chapter 2 - Psychological Contract
23
Fulfillment and violation are negatively related, but are not by definition the opposite
of each other (Rousseau & Tijoriwala, 1998). Employees can experience some sense of
violation, while giving the employer high marks on contract fulfillment overall. According
to Rousseau (1989), psychological contracts are best understood when they are violated.
This provides one of the reasons that it might be more interesting for researchers to
study breach and violation, instead of fulfillment. Maybe psychological contracts are not
considered that important till they are violated or breach occurs, which can also be related
to insights derived from motivational theories like the distinction between hygiene factors
and motivators of Herzberg et al. (1959). It might be the case that psychological contracts
operate more like a hygiene factor, in that when a contract is not perceived to be fulfilled,
it is in some way unbalanced and it will, therefore, become a de-motivator instead of a
hygiene factor, with all subsequent consequences. As suggested before, individuals will
take actions to rebalance the employment relationship, and one way to do this is to reduce
contributions towards the organization.
In summary, researchers focus mainly on violation and breach. A reason for this is that
as Robinson & Rousseau (1994) note, psychological contract breach and violation are
relatively common, but can have big consequences on employee behavior. The distinction
between breach and violation is not always applied. Because psychological contracts are
best understood when they are breached or violated this will be the main focus of our
study. We will use the terms breach and violation both for indicating a situation in which
employees perceive the obligations of the employer as not being completely fulfilled.
To capture the conditions under which psychological contract violation arise, we will
review existing work studying the relationship between individual level as well as
organizational level variables and the psychological contract (section 2.5).
Chapter 2 - Psychological Contract
24
2.5 Variables influencing the psychological contracts
Individuals may perceive that promises were made based on their own interpretation of
explicit or implicit information. Contract makers may not even be aware of the other
party’s contract terms, let alone agree to them (Lewis-McClear & Taylor, 1998). As
discussed before, individual behavior is to a certain degree influenced by the psychological
contract that is perceived promises, that is communication of future intent.
According to Rousseau (1995: 34), a series of organizational and individual processes
affect the creation and evaluation of the psychological contract. Since we are interested in
understanding which factors influence the formation and evaluation of the psychological
contract, in this section we discuss empirical and conceptual findings on individual level
and organizational level variables and their relationship with the psychological contract.
Because our main focus is on organizational level variables, we limit our discussion of
individual level variables. We conclude by providing a table (2-2) with an overview of the
various variables influencing the development and evaluation of psychological contracts,
as mentioned (based on conceptually and empirically established relations) in existing
literature. Although this overview has not the pretension of being complete, frequently
mentioned variables associated with the psychological contract are presented, and this
provides us with a basis of empirically studying the psychological contract.
2.5.1 Individual level variables
Existing empirical research provides us with indications of an influence of the
employees’ experience and initial level of trust in an employer (Robinson, 1996), past
experiences (Grant, 1999; Rousseau, 1995); personality (Orvis & Dudley, 2002); contract
status (Coyle-Shapiro & Kessler); careerism (Robison & Rousseau, 1994); and age
(Turnley & Feldman, 1999) on the psychological contract.
Chapter 2 - Psychological Contract
25
Turnley & Feldman (1999b) reason in their conceptual article on psychological
contract violation, that there might be differences across groups of employees in terms of
what is considered as violation. Age for example: younger employees are less likely to
expect spending their whole careers within one organization compared to older workers
and are, therefore expected to respond less strong to violation when there is downsizing.
Furthermore, a lot of studies limit their analysis to fulltime-employees (e.g. Robinson
& Rousseau, 1994; Robinson, 1996). A reason for this is that part-time workers may have
a different view of their psychological contract because of their contract’s focus on
flexibility and another way of identification with the organization.
The findings of the study of Coyle-Shapiro & Kessler (1999) towards contingent versus
non-contingent workers, suggest that contract status plays an important role in how
individuals view the exchange relationship and how they respond to the inducement they
receive from that relationship. As a result of the fact that contingent employees spent less
time in an organization, they might have lesser knowledge about the organization functions
and have greater tolerance for organizational policies than permanent employees (Coyle-
Shaprio & Kessler 1999).
Empirical literature thus provides us with indications of a relation between specific
individual characteristics and psychological contracts (for an extended overview, see table
2-2). In the following subsection, we focus on the relationship between organizational
level elements and the psychological contract.
2.5.2 Organizational level characteristics
Although individual characteristics influence the psychological contract, psychological
contracts develop in interactions between individuals and organization (Herriot &
Pemberton, 1996; Westwood et al., 2001). Research also provides us with (mostly
theoretical) indications that organizational structure and especially HRM are important
sources of interaction with employees, and, therefore, influence psychological contract
formation and evaluation.
Chapter 2 - Psychological Contract
26
Human Resource/personnel departments of organizations through their policies,
practices and actions, are in front line of employment relations and are, therefore,
considered to be particularly instrumental in the determination of psychological contracts
(Rousseau & Greller, 1994; Rousseau, 1995; Westwood et al., 2001; Koene & Van
Riemsdijk, 2005).
According to Rousseau (1995) events expressing plans for the future, signalling future
inducements and contributions often occur during personnel actions (hiring, socialization,
promotion, and development activities, which can be part of the activities of HRM
departments) or during organizational changes (e.g. downsizing, restructuring). Rousseau
& Greller (1994) suggest that one of the roles of HRM should be the creation and
maintenance of the psychological contract between organizations and their employees.
They state that HRM practices convey promises of future intent in exchange for
contributions of employees, thus influence the forming and evaluation of the psychological
contract. In line with this, they reason that each HRM practice represents a choice by the
organization about what they expect from its employees and what the employees can
expect in return.
According to Rousseau (2001), promises are inherent in day-to-day HRM practices
(Rousseau & Greller, 2001). HRM policy and practices thus (should) have a major impact
on the shaping and evaluation of employee and employer obligations (Rousseau, 1995:
162; Grant, 1999).
Robinson & Morrison (2000) discuss the importance of the recruitment process in the
development of the psychological contract and Rousseau (1995) argues that (amongst
others) the performance appraisal process provides an important moment for
communicating the psychological contract. HRM practices like recruitment and
performance appraisal are thus considered to be sending messages regarding the skills and
competencies that the organization expects from its employees, but also signal what the
employees can expect or are promised in return.
Chapter 2 - Psychological Contract
27
HRM practices are seen as communicating the nature of effectiveness the organization
expects from its employees (Sparrow, 1998), “One of the most powerful messages sent
through these human resource processes has to do with the nature of effectiveness”.
Guzzo & Noonan (1994) also conceptually relate human resource practices with the
psychological contract. They consider HRM practices as communications mechanisms, and
are interested in how these messages translate into attitudinal and behavioral outcomes.
They suggest that much of the information for psychological contract formation and also
for subsequent violation stem from the HRM practices of an organization. HRM practices
send signals that are interpreted by employees, and are relevant to their assessment of the
fulfillment of the psychological contract. In other words, they state that HRM practices
have communicative value.
Rousseau & Wade-Benzoni (1994) make an argument why business strategy, HRM
practices and psychological contracts are related. They also considered HRM practices as
major determinants of employees’ psychological contract and developed a conceptual
framework for understanding these relationships. Based on the work of Miles & Snow
(1984), who distinguish between various strategic positions (defenders, prospectors,
analyzers, responsive) they consider related choices in the HRM Practices (make or buy)
and subsequent psychological contracts (transactional/ relational/ balanced). As an
example of their line of reasoning, defenders focus their strategy at maintaining their
markets share; HRM practices should in that case be “make oriented” (e.g. focus on
socialization, formal career paths in which employees can work their way up); and as a
result the psychological contracts of employees can be typologized as relational.
HRM practices thus shape the behavior of employees. Rousseau & Wade-Benzoni
(1994) see HRM practices as an important mechanism for implementing the organizational
strategy. Based on this research, they suggest organizations to align their HRM practices
with their business strategy to avoid sending mixed messages to employees.
Chapter 2 - Psychological Contract
28
Guest & Conway (2002) empirically investigated the relationship between
organizational variables as organizational communication and HRM and the psychological
contract. The results of a survey of 1306 senior UK managers show amongst others a
positive relationship between organizational size and sector and psychological contract
breach. Larger organizations and those in the public sector were associated with more
breaches of the psychological contract. Furthermore, they found a negative significant
association between the number of HRM practices and several communication
mechanisms (job-, top down-, recruitment,-) and psychological contract breach.
Robinson & Morrison (2000) in discussing causes of contract breach, provide us with
more indications for the relationship between organizational features and psychological
contract breach. According to them, when the process of socialization in organizations is
fairly formalized or structured in nature, they expect new employees to form a set of
beliefs and assumptions that is similar to those held by agents of the organization, which
implies congruence and less potential for breach of psychological contract.
Huiskamp & Schalk (2002) found some empirical support that psychological contracts
are at least partly context specific; they found differences in psychological contracts
between employees working in organizations in different sectors. Further indications for a
relation between contextual elements and the psychological contract can be found in the
research of Janssens et al. (2003). In their research towards types of psychological
contracts in Belgium, Janssens et al. (2003) empirically distinguish between six types of
psychological contracts which were associated with the specific sector and size of the
organizations in which employees were employed.
Rousseau (2001) argues that employees are likely to interpret promises similar in
settings characterized by mutually reinforcing messages. Convergent human resource
practices increase the likelihood for similar elements of psychological contracts. She
defines human resource practices as structural signals regarding the organizations’
intentions towards their employees (Rousseau & Greller, 1994; Rousseau, 2001; see also
figure 2-3). Rousseau (2001) concludes that in line with the work of McDuffie (1995),
Chapter 2 - Psychological Contract
29
structural signals derived from human resource practices tend to send more coherent
signals when bundles of practices mutually reinforce each other. “Lack of integration or
alignment between HR practices and between HR and business strategies often signals
problems from the perspective of managing the individual’s psychological contract
because they might not send consistent messages to employees“(Rousseau & Wade-
Benzoni, 1994). Rousseau & Greller (1994) even go a step further in suggesting that a
contract based on mixed messages would not be a very efficient contract.
In general, Rousseau (2001) acknowledges the fact that less attention has been given to
promises implied by management actions or human resource policies “we need to
understand more about whether it is the practices themselves, or other signals that
accompany them (e.g. the co-occurrence of sets of practices such as training and follow-up
performance evaluations) that shape interpretations”.
Summarizing, psychological contracts can develop from the interaction of the
individual with his or her organizational environment through several means, including
HRM practices (Rousseau & McLean Parks, 1993; Rousseau & Greller, 1994). Although
contracts tend to be unique to each individual, organizational variables as the particular
HRM design, the particular sector and size of the organization, influence the development
and evaluation of psychological contracts through the sort of message or ‘signal’ it sends
to employees. Furthermore, consistency between the messages send by organizations
seems important in terms of fulfillment of psychological contracts. Authors like Guzzo &
Noonan (1994), Coyle-Shapiro (2001) and Rousseau (2001), acknowledge the fact that
more research is needed on the relationship between organizational variables, such as
specific HRM practices or bundles of practices and the psychological contract. In table 2-2
we provide an overview of the various elements influencing the psychological contract, as
mentioned in existing literature.
Chapter 2 - Psychological Contract
30
2.6 Conclusions
The psychological contract will be the lens through which we study the organization
(for instance in terms of HRM). In line with the conceptualization of Rousseau
(1989/1990/1995), we defined the psychological contract as: “an individual’s belief,
shaped by the organization, regarding reciprocal obligations”.
Defining features of the psychological contract in this study are:
The psychological contract is a concept at the individual level and considers individual
or idiosyncratic perceptions regarding the employment relationship
Psychological contracts are formed upon perceived obligations
They are held by individuals with respect to the organization
The psychological contract is shaped and can be managed by the organization
The psychological contract consists of three aspects, perceived employee obligations,
perceived employer obligations and perceived fulfillment/ violation of employer
obligations
These three aspects are inherently related to each other
Underlying theory and concepts in research towards the psychological contract are
(social and economic) exchange, balance and reciprocity. Based on insights derived from
exchange theory and related concepts of balance and reciprocity, we assume that when
employees perceive that the obligations of the organization compared to their own
contributions are not fulfilled, they will reciprocate by adjusting their attitudes and
behaviors. Psychological contracts are thus contingent upon the perceived behavior of the
other party. Because of reported negative effects of not completely fulfilled psychological
contracts, on individual attitudes and behavior, our main focus is on breach/violation of the
psychological contract. We will use the terms breach and violation both for indicating a
situation in which employees perceive the obligations of the employer as not being
completely fulfilled.
Chapter 2 - Psychological Contract
31
Research on the psychological contract has mainly focused on individual level analyses
of work perceptions of individual employees. In this study we are interested foremost in
organizational level elements influencing the psychological contract.
Because of the in previous research reported negative behavioral effects of
psychological contract violation on individual performance, it is interesting to investigate
the influence of organizational level variables on the psychological contract. There are
only a few empirical studies (e.g. Guest & Conway, 2002) which consider the relationship
between organizational level variables and the psychological contract, although many
authors provide indications for this relationship in more conceptual work.
HRM has been regularly put forward as a key organizational level element influencing
the development and evaluation of the psychological contract. The outcomes of these
previous studies ask for further studying this relationship. This could be done well by
using the definition of Rousseau, separating the employer side from the psychological
contract (the employee side), in studying the influence of organizational level elements as
HRM on the psychological contract, with the assumption that these elements (which can be
seen as part of the employers’ perspective) are, by this definition, not included in the
psychological contract itself.
In line with Rousseau (1995) HRM can be seen as part of the so-called secondary
contract makers, or “structural signals: vehicles people use to convey commitments and
offer inducements for present and future behavior”.
Chapter 2 - Psychological Contract
32
From this perspective, organizational practices (as HRM practices and elements of
organizational structure) can be seen as communicating mechanisms which are relevant for
employees’ assessment of the degree of violation of their psychological contracts. These
practices are expected to have an optimal influence on psychological contracts when the
practices promote a coherent organizational signal. Alignment between different ‘signals’
or messages sent by an organization, and alignment among organizational practices can, in
light of the psychological contract literature, be seen as important for constituting
organizationally ‘desired’ behavior.
In the following chapter we will gain more insight into the conceptualization of
structural signals and present our conceptual model and hypotheses for studying the
relationship between these structural signals and the psychological contract.
Chapter 2 - Psychological Contract
33
Table 2-2 Overview of variables associated with the psychological contract
Individual level elements Organizational level elements Empirical Age
(Robinson, 1996; Turnley & Feldman, 1999; Janssens et al. 2003)
Sector (Guest & Conway, 2002; Huiskamp & Schalk, 2002; Janssens et al. 2003)
Seniority (Janssens et al. 2003; Guest & Conway, 2002))
Size (Guest & Conway, 2002; Janssens et al. 2003)
Level of education (Janssens et al. 2003)
Number of HR practices (Guest & Conway, 2002)
Trade union membership (Janssens et al. 2003)
Gender (Ten Brink et al. 2001)
Careerism (Robison & Rousseau, 1994)
Personality (Orvis & Dudley, 2002)
Wage (Janssens et al. 2003)
Operational/ management position Janssens et al. 2003)
Level of experience in organization (Robinson, 1996),
Part-time/fulltime (Ten Brink et al. 2001; Conway & Briner, 2002; Coyle-Shapiro & Kessler)
Conceptual Structural signals: compensation/benefits/career path/performance review/ training/ personnel manuals (Rousseau, 1995)
Personnel actions: hiring, socialization, promotion, and development activities (Rousseau, 1995)
Business, political and market environments; organizational structure and the balance of power (Herriot & Pemberton, 1996)
Recruitment process (Robinson & Morrison, 2000)
HRM (Sparrow, 1998; Grant, 1999; Westwood et al. 2001; Rousseau & Greller, 1994; Guzzo & Noonan ,1994; Rousseau & Wade-Benzoni,1994)
Formalization of the socialization process (Robinson & Morrison, 2000)
Goal of organization (Farmer & Fedor, 1999)
Sector and size (Rousseau, 1995)
Consistency between HRM practices and its organizational context: (e.g. Rousseau, 2001 ; Rousseau & Wade-Benzoni, 1994; Rousseau & Greller, 1994)
34
Chapter 3 –HRM Signals
35
CHAPTER 3 HRM SIGNALS
3.1 Introduction
In the previous chapter (mostly derived conceptually) indications were found of
relationships between organizational level elements and the content and evaluation of the
psychological contract. An important role was predicted for HRM factors but also the more
general design factors that have a less direct relationship with the (perception of the)
employment relationship (such as age and size of the organization) where considered as
related with the psychological contract (see table 2-2). Furthermore, in this kind of
literature attention has been paid to the importance of coherence between the various
organizational practices or the so-called ‘structural signals’ (Rousseau, 1995/2001).
The aim of this chapter is to provide insight into and evaluate existing literature on
HRM and more general design factors (structural signals) and their relationship with
psychological contract violation. Furthermore, we combine these insights into a conceptual
model and hypotheses. In the first section, we discuss the concepts of signal(ling),
structure and structural signals (section 3.2) and present our basic conceptual model. In
order to capture the scope of the field of HRM and the range of activities HRM can pay
attention to (which can all have their signalling effect), we discuss domains or areas which
can be considered to be part of HRM (section 3.3). Within the field of HRM a distinction
can be made in various approaches of studying HRM, universalistic approaches versus
configurational approaches. These approaches are expected to have different signalling
effects in terms of psychological contract violation. We discuss these approaches and
develop our hypotheses in section 3.4.
3.2 Defining structural signals
In this study our interest is in the signalling effect of HRM and more general design
factors (as organizational structure) on the psychological contract of employees within
organizations. As defined in the previous chapter on psychological contracts ‘structural
signals are vehicles people use to convey commitments and offer inducements for present
and future behavior” (Rousseau, 1995).
Chapter 3 –HRM Signals
36
There are two concepts in this definition that we discuss in this section, namely the
concept of signal(ling) and the concept of structure. We clarify in short the origins of the
concept of signalling and after that discuss the signalling role of HRM.
3.2.1 The signalling perspective: what does signalling mean?
Signalling models are used in a variety of research areas. In International Economics
for instance, signalling is considered as an intervention strategy by a central bank for
influencing the market’s view of the future (e.g. Krugman & Obstfeld, 1994). Furthermore,
signalling approaches can be found in the area of Marketing in which signalling is
considered as an organization’s strategic behavior in signalling private information to
customers and competitors.
Signalling approaches are also common in Micro-economic Labor Relations, in which
signalling is used to explain the bonding or the (establishment) of a relationship between
an organization and its employees in the labor market (Spence, 1973). Because in this
study we are interested in the relationship between organizations and employees (in terms
of the psychological contract) we will elaborate on this last stream of research.
Spence (1973) discusses signalling in labor markets where as a result of information
asymmetry it is difficult for organizations to establish the quality or worth of employees.
Even though over time an employer can gain better information on the quality of
employees, at the time of hiring in particular, lack of information on the quality of an
employee for the organization can become a problem. Spence (1973) argues that hiring is
an investment decision because the capabilities of the person are not known beforehand,
which makes the decision to hire a person an uncertain decision.
Spence (1973: 357) uses the term signals for “observable characteristics attached to
the individual that are subject to manipulation”. Age for instance is not considered to be a
signal because although age changes, that fact is not at the discretion of the individual.
Education on the other hand, can be considered as a signal.
Chapter 3 –HRM Signals
37
Signals are assumed to be potentially open for manipulation even though there are costs
associated with this, considering the fact that education is costly. Spence further reasons
that individuals will decide to invest in education when there is sufficient return, and thus
will only invest in education when the signalling costs of this do not exceed the return (for
instance wage). This provides a reason why degrees are valued by employers since they
provide a signal with regard to the quality of the employee.
Spence develops a model in which he distinguishes between two types of workers:
workers that are highly productive and workers at a much lower level of productivity. The
first group is able to get education at lower cost than the second group. The signalling
equilibrium according to Spence exists in that higher productivity workers will seek and
find more training opportunities than lower productivity employees and as a result of this
process education signals quality of an employee. Organizations will prefer to hire and
might offer higher wages to employees with higher level of education because it provides
an indication of their level of productivity. Seen this way education can be a signal for the
productivity quality of workers.
Spence acknowledges that just as organizations receive less than perfect information
from applicants so do the applicants receive less than perfect information on their future
employer. Following this line of reasoning, the recruitment policy of an organization can
be considered as a signal concerning the qualities of an organization in the eyes of an
applicant. The cost associated with the recruitment policy can be enormous compared to
the returns when employees do not perceive these signals as intended.
In signalling models one party sends signals that the other party interprets, thereby
assuming an interaction between two interested parties. A signal is considered to be an
action/ behavior or characteristic of one party (the signaller) that influences the behavior of
the other party (the signal receiver). Signalling models clearly have links with agency
theory.
Chapter 3 –HRM Signals
38
Agency theory considers situations in which one party requires services from another
in a situation where uncertainty exists, where both parties will behave in their own interest
and where an information asymmetry between the principal (signal receiver) and the agent
(signaller) creates problems of trustworthiness of the signals sent out by the agent (see for
example Wright & McMahan, 1992 for a translation to the field of HRM).
Summarizing, signalling theory from an economic perspective is based on the
assumption of rational evaluation of both costs and benefits of signalling actions by parties
in a potential contract relationship. The agency perspective adds to this the issues of
information asymmetry and self-interested behavior of both parties. In signalling (and
agency) theory there is always an informed party (principal) and a not completely informed
or imperfectly informed party (agent). The basic problem is that two parties have access to
different information, and because their interests do not coincide entirely (conflict of
interest), they will not share their private information completely; as a result each has an
incentive not to be honest or not to fulfill its side of the bargain. Signals convey
information about the signaller to a signal receiver. Both interpret the information received
as signalling the true intentions of the other party. Signals are costly to produce and to
send.
In line with Spence (1973) and Rousseau (1995), we will use the term signals for
observable characteristics attached to the organization that are subject to manipulation by
organizations. These characteristics are vehicles that organizations use to convey
commitments and to offer inducements for present and future behavior (i.e. HRM and
organizational structure).
We assume that signalling exists when the organization is perceived by employees as
sending signals and thus assume interaction between both parties as a result of the way an
organization designs HRM and structure. A signal in this way is considered to be a
characteristic of the organization that influences the attitudes and behavior of the other
party (degree of psychological contract violation).
Chapter 3 –HRM Signals
39
Signalling theory makes us aware of the relationship between the signaller (in our case
the organization in terms of HRM and organizational structure) and the signal receiver
(employees in terms of their psychological contracts) based on issues such as information
asymmetry.
3.2.2 A signalling role for HRM and organizational structure
Starting out to investigate the impact of structural signals on perceptions of the
employment relationship, Rousseau (1995) focuses on the actual practices such as
compensation, benefits, performance review, training and personnel manuals within
organizations. She considers the signals these practices send as structural signals. HRM
practices are in this way seen as communicating mechanisms or vehicles (Guest &
Conway, 2002:22) signalling expectations of the organization regarding required behaviors
of employees and communicating its own reciprocal promises to employees. Furthermore,
research in this area acknowledges the signalling value of organizational structure in the
sense that structure is not seen as neutral, but as expressions of intentions, aspirations and
purposes (e.g. Greenwood & Hinings, 1993).
Although Rousseau (1995) focuses on HRM practices, structure in organization theory
is defined much more broadly encompassing HRM practices, but also focusing often on its
functional relevance in the process of organizing. Organizational structure has been
extensively studied in literature on organizational design (see for instance Mintzberg,
1979). Mintzberg (1979/1983) described organizational structuring as a mechanism to
reduce behavior variability, as: “the sum total of the ways in which labor is divided into
distinct tasks and then its coordination is achieved among these tasks”.
Literature on organizational design focuses on structural forms of organizations, such
as matrix and divisionalized structure, based on structural mechanisms as specialization
(the differentiation of tasks and positions), formalization (the formulation of rules and
procedures), and decentralization (the prescriptions of authority) (e.g. Pugh, Hickson &
Hinings, 1969; Galbraith,1977; Mintzberg, 1979; Miller, 1981).
Chapter 3 –HRM Signals
40
In general HRM can be considered as an aspect of organizational design. Greenwood &
Hinings (1993: 1054) make a distinction between three elements constituting design in
which they explicitly position aspects of HRM as elements of organization design: (1)
vertical and horizontal structures of roles and responsibilities; (2) decision systems, or
policy and resource allocation mechanisms; and (3) HRM systems, such as recruitment,
appraisal, and compensation.
Mintzberg (1997/1983) also considers HRM as an aspect of organizational design. He
discusses a set of design parameters, which he considers to be the basic component of
organizational structure: e.g. job specialization, behavior formalization, training and
indoctrination, planning and control systems and vertical and horizontal decentralization.
This subset of design parameters captures elements that are the specific focus of HRM
researchers who conceptualize these as HRM practices, such as training and
decentralization (e.g. Arthur, 1992; Boselie, 2002).
Based on this kind of literature, we consider HRM and the structure of an organization
as part of the design system. HRM research focuses on those aspects of organizational
design that most directly effect the employment relationship and organizational structure
reflects the broader context in which HRM is interpreted and understood. Organizational
structure and HRM can be seen to represent ‘structural signals’ in terms of Rousseau
(1995) affecting the employee’s perception of the employment relationship.
Concluding, in this research we are interested in the signalling value of HRM and
structure in organizations. Because HRM most directly influences the employment
relationship, our main focus is on the signalling value of HRM in terms of the
psychological contract. There can be a situation of information asymmetry in that the
organization decides on certain HRM practices, signalling values towards its employees,
which these employees might or might not perceive in terms of their psychological
contracts.
Chapter 3 –HRM Signals
41
3.2.3 Conceptual model
The conceptual model in figure 3-1 presented the outcomes of our analysis of the
literature until now. ‘Line B’ in de conceptual model represents the relationship between
the three elements of the psychological contract. Based on exchange theory and notions on
balance and reciprocity (see chapter 2) we expect that employees seek balance in their
employment relationship and reciprocate (by adjusting their own obligations) according to
their perception of the degree of balance. In a similar line of reasoning, signalling theory
also assumes interaction between both parties.
Based on literature on signalling, we assume that signalling exists when the
organization is perceived by employees as sending signals through its HRM practices and
organizational structure. HRM and organizational structure are considered to be
characteristics of the signalling organization and are expected to be related to the degree of
psychological contract violation of the employees, the signal receivers. Putting these
insights together we expect actions of the organization, HRM practices and aspects of
organizational structure, to have consequences for the employees’ psychological contract
(indicated by the line ‘A’ in the conceptual model).
Figure 3-1 Conceptual Model
Chapter 3 –HRM Signals
42
Whilst focusing our attention on HRM we already emphasize those aspects of
organizational design that most directly affect the employment relationship. However, it is
necessary to understand that HRM practices do not constitute a monolithic range of
practices and design elements. HRM itself is a multifaceted area of interest considering a
range of topics or domains within organizations that can all have an effect on the
psychological contract of employees. We discuss domains or areas in which HRM can be
active in the next section.
3.3 Domains of Human Resource Management
According to authors such as Schein (1977), HRM focuses on those aspects that are
critical in aligning employee and organization’s goals and needs. HRM is thus considered
to have a central function in the materialization of the employment relationship of
employees with the organization. As suggested in the previous chapter, researchers
studying the psychological contract have convincingly argued for an effect of HRM
practices on employees’ perceptions and evaluations of their employment relationship with
the organization (e.g. Rousseau & Greller, 1994; Guzzo & Noonan, 1994; Rousseau &
Wade-Benzoni, 1994). Studies investigating the impact of HRM, however, have been
suffering from the fact that the field of HRM is lacking agreement on what exactly HRM is
and how to operationalize HRM (e.g. Becker & Gerhart, 1996; Boselie & Dietz, 2003).
There are several reasons for this, which can be traced back to the multidisciplinary
nature and development of the field (e.g. psychology/ economics/ legal/ sociology). This
has resulted in a diversity of areas or domains in which HRM is studied, such as industrial
relations and organizational development. These various domains focus on a range of
aspects in the management of the employment relationship that can influence the
perceptions of the employees regarding their relationship with the organization in a variety
of ways. Aspects of industrial relations for instance focus on the representational system
and thus the influence (or power) employees might have within an organization, whereas
the training policy of an organization provides an indication of the way organizations will
invest in the actual development of their employees. To gain insight into the signalling
value of HRM it is essential to understand these various domains.
Chapter 3 –HRM Signals
43
Several researchers make a distinction between HRM areas (Buitendam, 1979; Van
Bastelaer & Van Beers, 1982; Beer et al., 1985; Arthur, 1992; Gospel, 1992; Osterman,
1994; Leijten, 1995). Beer et al. (1984) define HRM as involving “all management
decisions that affect the relationship between the organization and employees – its human
resources” and consider four areas as part of human resource policy: employee influence,
human resource flow, reward systems and work systems.
Leijten (1995) studies the manner in which personnel management stimulates the
effectiveness of organizations and makes a distinction between four domains of personnel
management based on the work of Beer et al. (Beer et al., 1989):
1. Human resource flow: entails the process of input, throughput and output of personnel,
thereby covering practices such as recruitment & selection, training & development;
2. Reward systems: focus on the way in which managers develop fair and equitable
(im)material reward systems to satisfy and motivate personnel;
3. Work systems: focus on the design of work, for instance coordination of tasks, and on
elements such as safety, health and well-being;
4. Employee influence: focus on the choice managers make regarding the extent to which
they decentralize authority and power (in this domain works counsels and unions also
play a role).
The development of these domains can be considered as an attempt to summarize the
different areas in which HRM plays a role. In this research we use a Dutch interpretation of
these domains as developed by Buitendam (1979) and tested by Van Bastelaer & Van
Beers (1982). They factor analyzed 24 HRM practices resulting in a distinction between
four domains of HRM, made up of combinations of HRM practices related to key issues in
the organization (staffing/ employee relations) and the degree to which these practices are
internally or externally oriented. For an overview of these domains see table 3-1.
Chapter 3 –HRM Signals
44
Table 3-1 Overview of HRM domains (Buitendam, 1979)
HRM Domains Industrial relations system: developing and legitimizing specific arrangements for labor deployment; mobilizing of resources and negotiations concerning labor agreements; regulation of collective relations Work systems: development and maintenance of motivational and cultural contexts for the regulation of tension between employees and the organization; the development of commitment to the organization. Development of HRM policy and organizational development: development and maintenance of the consistency between the parts of the organization and between social groups within the organization, striving towards integration and solidarity. Human resource flow: mastering and regulation of external relations and internal processes concerning acquisition and allocation of personnel.
Following Buitendam (1979), Van Bastelaer & Van Beers (1982) thus differentiate
between the following domains: Industrial relation system, referring to the representational
system which exist within an organization; Work systems, focusing on the design of work
(e.g. coordination of tasks, safety, health and well-being); Development of HRM policy
and organizational development focusing on consistency, integration and solidarity within
the organization; and Human resource flow, consisting of general practices such as
selection and appraisal. Van Bastelaer & Van Beers (1982) discuss that organizations can
differ in the attention they pay (dominance) to the various domains of HRM, based on
characteristics of the organization as the degree of homogeneity and stability of the
working force.
To indicate the relevance of these domains and their practices, we discuss various
approaches towards studying HRM and their relationship with psychological contract
violation in the next section.
3.4 Models/ approaches for studying HRM
The signalling value of HRM on employees’ perceptions of the employment
relationship requires a specific view on the influence of HRM in organizations. Minimal
signalling is necessary for employees to be able to build any view of their employment
relationship at all. An increase of the amount of organizational information may provide
Chapter 3 –HRM Signals
45
richer information for the employee to build his own understanding of his employment
relationship with the organization. The specific focus of HRM (e.g. organizational
development) is of course considered as important, since it signals required behavior of
employees. Furthermore, coherent organizational signalling is considered important.
Alignment between different ‘signals’ or messages send by an organization, is seen as
important for constituting organizationally ‘desired’ behavior.
In their approach to the role of HRM in organizations, researchers provide evidence
and theory on the impact of HRM in organizations along these avenues of reasoning (e.g.
Boxall & Purcell, 2003; Paauwe, 2004). Universalistic HRM research focusing on best
practices and empirically investigating the influence of these HRM practices on
organizational outcomes, mainly provides evidence that helps to build our understanding
of the role of HRM practices in providing information about the (fulfillment of)
organizational expectations of the employment relationship (the higher the amount of
HRM practices, the better, see Guest et al., (2003)).
Furthermore, another stand of this type of research emphasizes that some HRM
practices are more important than others for influencing individual behavior (so called
High Performance Work or High Commitment Practices, see for instance Appelbaum et al.
2000). The so-called ‘fit’ or configurational approaches, on the other hand, help to build
the case for coherence of signalling. Fit approaches as contingency (vertical fit) and
configurational, emphasize the importance of coherence of organizational signalling (e.g.
Mintzberg, 1979; Verburg, 1998). In these approaches signalling is not only related to
HRM, but also to aspects of organizational structuring. Both the universalistic and the
configurational approach provide explanatory mechanisms for investigating the
relationship between HRM and the psychological contract.
These two approaches and their specific relation with the psychological contract
(leading to the formulation of our hypotheses) are discussed in the following subsections.
Chapter 3 –HRM Signals
46
3.4.1 Universalistic approaches
Typically for a universalistic approach towards HRM is that researchers in this stream
do not incorporate contingency factors, so regardless of the context of the organization
these HRM practices (or their combinations) have a relationship with performance. When
conceptualizing HRM in terms of HRM practices, it becomes important to distinguish the
specific practices compromising HRM. There are several authors who provide us with an
overview of practices used by researchers in the field.
Paauwe & Richardson (1997) for instance, extensively reviewed empirical research on
the relation between HRM and performance. They conclude that research has been
conducted towards the relationship between the following HRM activities and aspects of
performance: recruitment/selection, HRM planning, rewards, participation, intern
consistent HRM- bundles, decentralization, training/employee development, organizational
structures/ internal labor market and formal procedures. When reasoning from the
psychological contract, the availability of HRM policies and practices specifying the
employment contract enhances the amount of information about the employment
relationship. There does not seem to be a broad consensus on which practices have a
universalistic relationship with aspects of organizational and/or behavioral performance
and which do not. To gain more insight in this, we consider two universalistic approaches:
the first regarding the amount of HRM practices employed by the organization; and the
second regarding the specific focus of HRM or combinations of HRM practices.
3.4.2 Amount of HRM practices
Following the best practices or universalistic approach, there is a relationship between
psychological contract and HRM based on the messages the organization sends through its
separate HRM practices. In light of the psychological contract, every added HRM practice
then provides additional information regarding employee and organizational obligations.
This information is relevant for employees’ assessment of fulfillment of the
organization’s obligations, thus leading to less violation of these expectations. In a similar
line of reasoning, Guest et al. (2003), in their study towards the relationship between HRM
and performance in a sample of UK companies, found relationships between the greater
Chapter 3 –HRM Signals
47
use of HRM practices and (subjective) indicators of performance. Thus the more HRM
practices, the more signals or information sent by the organization, the less violation of
psychological contracts. This leads us to the first hypothesis:
H1: The more HRM practices, the less psychological contract violation.
3.4.3 The focus of HRM
Several HRM researchers investigated the relationship between combinations of HRM
practices (HRM systems) and their relationship with performance. According to
researchers in this stream, although each HRM practice can be important, in order for an
organization to be high performing the HRM system should consist of an effective
combination with a specific focus of these practices.
One of the reasons for paying attention to combinations of HRM practices is to avoid
combinations that work in opposite directions, for example combining the practices of
teamwork and rewarding individual performance. Another reason for studying
combinations of practices is the costs associated with the duplication of practices. The
underlying premise of this kind of literature is that the use of certain kinds of systems with
their specific focus will be positively related to performance of the organization when
compared to other systems. Considering these combinations, we need to gain insight into
the specific practices that constitute a HRM system and the basis on which practices would
be bundled together.
Several authors identify a set of ‘best practices’. Delery & Doty (1996) for instance
identify seven HRM practices that they consider as having a relationship with
organizational performance based on the work of amongst others Osterman (1987) and
Miles & Snow (1984): internal career opportunities, formal training systems, appraisal
measures, profit sharing, employment security, voice mechanisms and job definition.
These practices are considered strategic HRM practices in the sense that they are supposed
to have a relationship with organizational performance.
Chapter 3 –HRM Signals
48
Pfeffer (1994) concluded in his research towards the relationship between practices and
performance, that the greater use of the management practices as employment security,
selectivity in recruiting, high wages, incentive pay, employee ownership, information
sharing, participation and empowerment, training and skill development, wage
compression, the higher the productivity and profit in organizations in general.
Boselie & Dietz (2003) investigated the relationship between HRM and performance
by reviewing empirical articles in leading journals. In searching for common elements in
practices constituting HRM, they conclude that the five most common policies and
practices which are considered to be part of HRM are: training (general and/or specific)/
employee development; incentive-based payment systems; decentralization/ employee
participation in decision-making; investment in selection; and teamwork. According to
Boselie & Dietz (2003), there is little consensus on which practices exactly should be
combined, which according to them might be based on a lack of theory for selecting and
classifying practices (which is amongst others reflected in the terminology of these
combinations of practices).
HRM theorists as Arthur (1992), Kochan & Osterman (1994) and Pfeffer (1994)
propose high commitment and other types of high involvement work systems, thereby
suggesting that there exist ‘optimal’ HRM systems for managing employees. This is
clearly a universalistic argument in that regardless of the circumstances within the
organization and of the environment of the organization, these systems are considered best
for all organizations.
Arthur (1992/1994) develops two possible HRM systems, the commitment maximizing
system (encouraging discretionary employee efforts, a way to attract, motivate and retain
qualified employees committed to the goals of an organization) and the cost reduction
system (aimed at reducing direct labor cost and other employment-relations expenditures
(see table 3-2). Arthur (1994) found within in his research on steel mini-mills, that HRM
systems emphasizing employee commitment were associated with a higher productivity.
Chapter 3 –HRM Signals
49
Table 3-2 Two systems of workplace industrial relations (Arthur, 1992: 491)
Industrial Relations Functions
Type of system Cost reduction
Commitment Maximizing
Organization of Work Job tasks narrowly defined Broadly defined jobs Employee Relations Very little employee
influence over “management” decisions; No formal employee complaint/ grievance mechanisms; Little communication/ socialization efforts
High level of employee participation/ involvement; Formal dispute resolution procedures (non-union firms) Regularly share business/ economic information with employees
Staffing/ Supervision Low skill requirements; Intense supervision/ Control
High percentage of skilled workers; Self-managing teams
Training Limited training efforts More extensive, general skills training
Compensation Limited benefits Relatively low wages Incentive-based
More extensive benefits; Relatively high wages; All salaried/ stock ownership
MacDuffie’s (1995) research on automotive assembly plants concludes that high
commitment HRM practices (such as contingent compensation and extensive training)
outperformed control oriented HRM practices. Furthermore, Osterman (1994) found that
organizations that value employee commitment are associated with investing in innovative
work practices. According to Osterman (1994), the use of these innovative work practices
or flexible work systems (such as teamwork, job rotation, quality circles, total quality
management) results in higher productivity for all (American) organizations.
Appelbaum et al. (2000) in their study towards High Performance Work Systems
(HPWS), examining three US industries (steelmaking, clothing manufacture and medical
electronics manufacture) also adopt a universalistic systems perspective. According to
them, work systems and employment modes that support high performance are: more
rigorous selection, better training systems to increase ability levels, more comprehensive
incentives to enhance motivation, participative structures (such as self-managing teams and
quality circles) that improve the opportunity to contribute (Appelbaum et al., 2000).
Chapter 3 –HRM Signals
50
Researchers thus acknowledge that organizations can differ in their approach towards
managing its employees (for instance a focus on control or commitment) and there can be
found indications that commitment oriented approaches outperform more control oriented
ones. This raises the question whether certain combinations are better than others?
Although researchers acknowledge that organizations can differ in their approach towards
managing employees, several authors focus on commitment enhancing HRM systems
because their research supports that these are associated with higher performance than do
for instance control systems (e.g. Arthur, 1994). The rational for this is they align the
interest of employees and organizations in a better way.
According to Huselid (1995), employees will only contribute discretionary effort if
they believe that their interest is aligned with the interest of the organization (reciprocal
investment). Their premise is that high performance work (HPW) or innovative or high
commitment oriented practices are the best for achieving high performance. A highly
committed workforce is thus seen as important in realizing organizational goals.
These researchers thus assume that adopting these commitment systems (or whatever
terminology they use) are best for all organizations and do not specify alternative systems
which could be equally effective. These commitment systems are supposed to generate
high commitment as a result of their focus on enhancing skills and motivation of
employees. The assumption is that organizations cannot be high performing without the
commitment of employees. These researchers assume that commitment systems
outperform universally all other systems.
Concluding, there is no specific consensus on which practices can be considered as
commitment HRM practices. In general there is agreement on their main focus: enhancing
skills and motivation of employees. Organizations that focus on commitment HRM
practices are considered as consciously paying attention to and investing in their human
capital. HRM practices are aimed at motivation of employees by increasing their skills and
involvement (as the degree to which HRM departments pay attention to and accompany
training, communication, job rotation and so on).
Chapter 3 –HRM Signals
51
Referring back to the four domains of Van Bastelaer & Van Beers (1982) as presented
in table 3-1, commitment HRM practices are part of the domains ‘Development of HRM
policy’ and organizational development’ (focusing on consistency, integration and
solidarity within the organization) and ‘Work systems’ (focusing on the design of work,
e.g. coordination of tasks, safety, health and well-being).
In the previously discussed literature, not only these practices themselves, but also
internal consistency or fit between these commitment or high performance practices, is
seen as important for constituting high performance. Basically this literature suggests that
unless there is consistency or fit between the practices, there will be no relationship with
high performance.
This raises the question on how to combine these commitment practices in a system.
According to Delery (1998) this depends in large on the nature of these practices and their
combinations:
1. Additive: practices have independent non-overlapping effects on the outcome. An
example of this would be the use of two assessment tests, measuring different aspects.
Together they may have a good result, but not more than the sum of the two parts,
they are independent;
2. Substitutable: adopting combination of practices does not add something to the
outcome of interest, but is only costly. Both practices lead to identical outcomes.
When incorporating both practices, this would not lead to a better result, it just costs
more;
3. Positive synergetic effects: combination greater than the sum of parts;
4. Negative synergetic effects: when the practices work against one another,
organizations that combine the two practices will be less effective than if they just
incorporated one of them: as Becker et al. (1997) call it: “a deadly combination”.
Chapter 3 –HRM Signals
52
Even though commitment practices that constitute a commitment system are expected
to be interrelated, when multiplying them in order to capture synergetic effects, they raise
several problems: for instance when one practice is not present, this would result in a zero
score on commitment. Although theoretically ‘commitment researchers’ post needs for fit
between the practices, practically it is too complicated and out of the four possible ways of
combining the practices into a system (Delery, 1998), adding the practices seems most
appropriate (MacDuffie, 1995; Becker & Huselid, 1999).
In line with the previous discussed literature on commitment HRM (e.g. Arthur, 1994;
Huselid, 1995; Appelbaum et al., 2000), we expect that commitment HRM practices align
the interest of employees and organizations. These practices are expected to have a
universalistic additive and positive effect on the employees’ performance. Furthermore, we
assume that the more the organization focuses at commitment HRM, the more consistent
the signalling value of HRM in terms of the psychological contract.
Based on these insights, we expect that violation of the psychological contract can be
explained by the degree to which the organization employs commitment oriented HRM
practices. This leads to the second hypothesis.
H2 The more commitment focused HRM, the less psychological contract violation.
In the previous discussed literature researchers thus assume that commitment oriented
HRM practices outperform irrespective of the context. According to authors like Delery &
Shaw (2001), this might not necessarily be the case. The effectiveness of a commitment
system could depend on the circumstances within the organization and of the organization.
This stream of research is based upon a configurational approach.
We discuss the configurational approach towards HRM and organizational structure
and its signalling implications in light of the psychological contract in the following
subsection.
Chapter 3 –HRM Signals
53
3.4.4 Configurational approaches
Researchers within the configurational stream focus on combinations of HRM practices
and its wider organizational context (MacDuffie, 1995; Delery & Doty, 1996). The
configurational approach emphasizes the notion of fit, both between HRM practices
(internal fit) and between HRM and its wider organizational context (external:
organizational and vertical fit), reflected in such factors as structure, strategy, technology,
environmental stability and organizational size (Delery & Doty, 1996; Schuler & Jackson,
1996).
The assumption of the configurational approach is that the closer an organization’s
activities resemble one of the typologies (configurations), the greater the performance
gains, because of the synergetic effects of the bundles of practices. In most cases the
typologies stem from theory (theoretical constructs) rather than practice (empirically
observable).
The configurational approach is based upon two assumptions or principles: (1) holistic
principle of inquiry: identification of configurations or unique patterns of factors that are
posited to be maximally effective; and (2) assumption of equifinality: multiple unique
configurations can result in maximal performance (Miller & Friesen, 1984; Doty et al.,
1993; Delery & Doty, 1996). According to the assumption of equifinality, a situation can
be reached from different initial conditions and in different ways (Gresov & Drazin, 1997).
In this line of reasoning a variety of combinations of organizational structures and HRM
can exist.
A constraint on the amount of effective configurations could be the presence of
contingency factors (e.g. Doty, Glick & Huber, 1993). According to the principle of
equifinality, however, the forms an organization adopts can be equally effective. This is
clearly a break with the approach discussed in the previous subsection, where researchers
assume that optimal combinations of HRM practices exist in general (i.e. commitment).
Chapter 3 –HRM Signals
54
The configurational and contingency approaches have inspired a number of currently
very influential perspectives on the strategic design of HRM. Regarding contingency
approaches, many researchers advocate that HRM should be linked to strategy, and
consider strategic HRM as the focus of their research (e.g. Arthur, 1992/1994; Schuler &
Jackson 1996). According to Boxall & Purcell (2003: 48) “the term strategic implies a
concern with the ways in which HRM is critical to the firm’s survival and its relative
success”. The strategic nature of HRM incorporates that the objectives of an organization
have an influence on the way it manages employees, it emphasizes the strategic role of
HRM in meeting business objectives (Delery, 1998).
Various authors (Arthur, 1992; Delery & Doty, 1996; Lepak & Snell, 1999; Ostroff,
2000; Boxall, 2003) propose typologies of HRM based on the strategy of the organization,
thereby taking a contingency perspective on HRM, combined with a configurational
perspective, in that they propose typologies of equally effective combinations of HRM
depending on the strategy of an organization.
As suggested in the work of for instance Delery & Doty (1996) and Verburg (1998),
the configurational approach can be seen as based on a combination of a special sort of
contingency approach and bundles or systems approach because it combines notions of
horizontal vertical and organizational fit. Since we are interested in structural signals, our
main focus is on HRM and organizational structure as elements of the configurational
approach, and not on the typical strategy of the organization.
Typically, configurational approaches were used in organizational design, in which
some sort of classification based on structure was made (Pugh et al., 1969; Mintzberg,
1979). In these types of approaches the emphasis is on structural forms, design and
context/ contingency factors. Coherence between the various design elements (horizontal
and organizational fit) is seen by various researchers as more important than fit of the
design with external demands (see Gresov & Drazin (1997: 407/408) for further
explanation on this topic).
Chapter 3 –HRM Signals
55
In the past decades various HRM Researchers have attempted to identify several ideal
types, i.e. combinations of structure, HRM and context factors that naturally go together
and form logical coherent sets of mutually reinforcing practices (e.g. Paauwe, 1989;
Verburg, 1998; Pichault & Schoenaers, 2003). These researchers take a configurational
approach, integrating structural features of an organization with HRM systems. Paauwe
(1989), Verburg (1998) and Pichault & Schoenaers (2003) investigated the relationship
between HRM and characteristics of the organization and the environment, based on the
work of Mintzberg (1979). Mintzberg (1979) combines notions of internal and external fit.
He states that in order for organizations to be effective, they should design configurations
that are internally consistent and are aligned with contextual elements such as age, size and
technology. According to Mintzberg (1979) ideal types of organizational structures are
coherent organizational systems that are extremely effective in dealing with certain
environmental factors. External factors or context factors are for instance stability, level of
knowledge, diversity and hostility. Internal factors are for instance size, age, technical
system and distribution of power.
The elements of organizational structure in the work of Mintzberg include:
1. Five basic parts of the organization: the operating core, strategic apex, middle line,
techno -structure, and support staff;
2. Five basic mechanisms of coordination: mutual adjustment, direct supervision, and the
standardization of work processes outputs, and skills;
3. The design parameters: job specialization, behavior formalization, training and
indoctrination, unit grouping, unit size, action planning and performance control
systems, liaison devices, vertical decentralization, and horizontal decentralization;
4. Contingency factors: age size, technical system, environment and power.
Mintzberg (1979) distinguishes between various basic configurations: Simple
Structure; Machine Bureaucracy, Professional Bureaucracy, and Adhocracy (in later work
he also makes a distinction between the Divisional, Missionary and Political
configuration). Each of these configurations relies on one of the five coordinating
mechanism and tends to favor one of the five parts.
Chapter 3 –HRM Signals
56
According to Mintzberg (1983), coordinating mechanisms, design parameters and
situational or context factors all seem to fall into natural clusters, or configurations.
Effective organizations achieve an internal consistency among their design parameters as
well as compatibility with their situational factors (Mintzberg, 1983: 152). An organization
is often driven towards one of the configurations in its search for harmony in its structure
(Mintzberg, 1983: 288): “It may experience pulls towards different configurations but it
often exhibits a tendency to favor one of them. The organization with an integrated
structure also faces an environment, a technical system, a size, even an age and a power
system consistent with that structure. Thus, we sometimes find that different organizations
in the same industry prefer different configurations depending on which pull they decided
to respond to”.
In an attempt to summarize the conclusions of the configurational and contingency
approaches and incorporate HRM within these approaches, authors like Paauwe (1989),
Pichault & Schoenaers (2003) and Verburg (1998) developed ideal typical HRM systems
expected to be most effective within the configurations of Mintzberg, incorporating
elements of the studies discussed before. We will shortly discuss the work of these authors.
Chapter 3 –HRM Signals
57
Paauwe (1989)
Paauwe (1989) conducted longitudinal qualitative research towards the relationship
between HRM policy, organizational structure and the environment of the organization.
For each of three configuration of Mintzberg, he conducted research within two
organizations.
With regard to aspects of HRM, Paauwe (1989) makes a distinction between:
• Procedural HRM rules: rule setting and process of decision making (formal/informal,
planned/unplanned, top down/ bottom-up, etc.).
• Substantial HRM rules: HRM-activities (number, detailed/not detailed,
(un)formalized, etc.)
Based on the work of Mintzberg, he related these two aspects of HRM with three of
Mintzberg’s ideal types, namely the Simple structure, the Machine bureaucracy and the
Professional bureaucracy.
In his study Paauwe found support for the existence of these ideal type configurations
incorporating HRM. In his model Paauwe incorporated both commitment oriented HRM
(in line with Van Bastelaers & Van Beers, 1982), and internal and external contingency
elements (e.g. Mintzberg, 1979). Table 3-4 presents an overview of the insights of the
work of Paauwe (1989) and also two elaborations of this kind of perspective by Verburg
(1998) and Pichault & Schoenaers (2003).
Chapter 3 –HRM Signals
58
Verburg (1989)
The model of Verburg (1998) combines fit among elements of organizational design,
contextual factors and HRM. In order to study fit between HRM practices, Verburg (1998)
defines HRM along two dimensions:
• The nature of the HRM policy: defined as control versus commitment oriented;
• Locus of responsibility for employee development (company versus individual).
Combining these two dimensions in line with the work of Mintzberg, Verburg (1998)
has developed four types of organizations each with their own typical design of HRM:
machine model, market model, development model and flexibility model (see table 3-3).
Table 3-3 Dimensions of Configurations (translated from Verburg 1998: 46)
Goal of HRM Responsibility outcomes Organization Individual Control Machine model
- Many rules and procedures - Few possibilities for
development - HRM department
Market model - Few rules and procedures - Few possibilities for
development - Owner
Commitment Developmental model - Many rules and procedures - Many possibilities for
development - Decentral. departments
(working with HRM-dep.)
Flexibility model - Few rules and procedures - Many possibilities for
development - Line managers
Based on cluster analysis, Verburg (1998) found support in his data on 175 Dutch
organizations for two of the four models, the developmental (Mintzberg’s professional
configuration) and machine model (Mintzberg’s machine bureaucracy), which he explains
as due to the nature of his sample (high share of relatively formalized companies). As did
Paauwe (1989), Verburg (1998) incorporates the earlier mentioned dimension of
commitment as well as context elements.
Chapter 3 –HRM Signals
59
Pichault & Schoenaers (2003)
Based on the work of Mintzberg (1979), Pichault & Schoenaers (2003) developed five
HRM models, referring to the way in which social relations are managed:
1. Arbitrary model related to Mintzberg’s simple structure: characterized by an absence
of any codified criteria (for instance, absent industrial relations). The leaders’ absolute
power is an obstacle to any recourse to formalized criteria;
2. Codifying model, which is related to Mintzberg’s machine model: systemizes the
various dimensions of HRM policy. It involves impersonal criteria, defined by
analysts, notably in the context of labor agreements, in which the right to union
representation is exerted, ruling social relations by applying them uniformly to all
members of the organization. Characterized by high involvement of unions and
coordination by formal mechanisms;
3. Value model which is related to Mintzberg’s missionary organization: HRM operates
on an implicit mode, strongly based on the notions of self-sacrifice, with constant
reference to values;
4. Agreement model, which is related to Mintzberg’s professional configuration: the
members of an organization agree to collectively define the context and terms of their
coexistence. There is a presence of skilled operators, coordinated by standardization of
skills. Operators have much room to maneuver (decentralization);
5. Individualizing model which is related to Mintzberg’s adhocratic configuration: is
based on the personalization of social relations. There is a presence of skilled
operators and a highly flexible structure based on interpersonal relationships.
The HRM models of Pichault & Schoenaers (2003) mainly focuses on the distribution
of power, and the conditions under which work is performed, on aspects of Van Bastelaers
& van Beers (1982) domains Industrial relations and Work systems.
Chapter 3 –HRM Signals
60
3.4.5 Configurational approach of this study
Building on the model of Mintzberg (1979), (and without aiming at being complete)
table 3-4 provides an overview of the insights of the previously discussed approaches of
Paauwe (1989), Verburg (1998) and Pichault & Schoenaers (2003). In line with Verburg
(1998), we focus our attention on four ideal types of Mintzberg: simple structure, machine
bureaucracy, professional bureaucracy and adhocracy.
Considering our focus on commitment HRM (as discussed in the previous section),
these four ideal types can considered to be the most straightforward in their underlying
parameters. The divisional ideal type for instance, can be seen as a hybrid form, since
within the divisional configuration each division can have its own typical design, which
can well be described using the three other configurations (Paauwe, 1989). As presented in
table 3-4, these four configurations differ clearly from each other on their combination of
HRM, organizational structure and context.
Because our interest in structural signals, which are defined as “observable
characteristics attached to the organization that are subject to manipulation”, in this study
we will focus at the most defining and frequently used structure-concepts of these
configurations, namely formalization and decentralization. One of the most defining
concepts of organizational context in these approaches clearly is the complexity and
stability of the environment or the degree of uncertainty of the environment.
Cha
pter
3 –
HRM
Sig
nals
61
Tabl
e 3-
4 O
verv
iew
of e
lem
ents
of t
he fo
ur c
onfig
urat
ions
2
Si
mpl
e st
ruct
ure
Mac
hine
bur
eauc
racy
Pr
ofes
sion
al b
urea
ucra
cy
Adh
ocra
cy
K
ey c
oord
inat
ing
mec
hani
sm
Stra
tegi
c ap
ex
Stan
dard
izat
ion
of w
ork
Stan
dard
izat
ion
of sk
ills
Mut
ual a
djus
tmen
t K
ey p
art o
f org
aniz
atio
n St
rate
gic
apex
Te
chno
stru
ctur
e O
pera
ting
core
Su
ppor
t sta
ff
Des
ign
para
met
ers:
Tr
aini
ng a
nd in
doct
rinat
ion
Littl
e tra
inin
g an
d in
doct
rinat
ion
Littl
e tra
inin
g an
d in
doct
rinat
ion
Muc
h tra
inin
g an
d in
doct
rinat
ion
Muc
h tra
inin
g
Form
aliz
atio
n of
beh
avio
r B
urea
ucra
tic/
Org
anic
Littl
e fo
rmal
izat
ion/
org
anic
M
uch
form
aliz
atio
n bu
reau
crat
ic
Littl
e fo
rmal
izat
ion
bure
aucr
atic
Li
ttle
form
aliz
atio
n
Dec
entra
lizat
ion
Cen
traliz
atio
n Li
mite
d ho
rizon
tal d
ecen
traliz
atio
n H
oriz
onta
l and
ver
tical
de
cent
raliz
atio
n Se
lect
ive
dece
ntra
lizat
ion
Situ
atio
nal f
acto
rs:
Age
and
size
Ty
pica
lly y
oung
and
smal
l (fir
st
stag
e)
Typi
cally
old
end
larg
e (s
econ
d st
age)
V
arie
s Ty
pica
lly y
oung
Envi
ronm
ent
Sim
ple
and
dyna
mic
, som
etim
es
host
ile
Sim
ple
and
stab
le
Com
plex
and
stab
le
Com
plex
and
dyn
amic
, som
etim
es
disp
arat
e
Paau
we
(198
9)
Pr
oced
ural
HR
M ru
les:
-in
form
al
-unp
lann
ed
-top-
dow
n
Subs
tant
ial H
RM
rule
s:
smal
l num
ber
-not
det
aile
d -n
ot fo
rmal
ized
-c
ontro
l -e
mph
asis
on
wor
kers
righ
ts
-no
job,
func
tion
or re
war
d
Proc
edur
al H
RM
rule
s:
-for
mal
-p
lann
ed
-top-
dow
n (th
roug
h st
aff,
depa
rtmen
t HR
M)
Subs
tant
ial H
RM
rule
s:
-hig
h nu
mbe
r -d
etai
led
-for
mal
ized
-a
s wel
l rul
es fo
r con
trol a
s co
mm
itmen
t orie
nted
act
iviti
es
Proc
edur
al H
RM
rule
s:
-info
rmal
-u
npla
nned
-n
or to
p-do
wn
or b
otto
m-u
p, b
ut
linke
d to
initi
ativ
es o
f div
erse
di
visi
ons
Subs
tant
ial H
RM
rule
s -n
umbe
r dep
ends
on
size
-f
orm
aliz
atio
n de
pend
s on
size
-e
mph
asis
on
train
ing
and
deve
lopm
ent
2
Bas
ed o
n M
intz
berg
, 197
9/ 1
983;
Paa
uwe,
198
9; P
icha
ult &
Sch
oena
ers,
2003
; and
Ver
burg
,199
8. A
lthou
gh M
intz
berg
’s (1
979)
des
crip
tion
of th
e di
men
sion
of t
he c
onfig
urat
ions
is m
ore
exte
nsiv
e th
an p
rese
nted
her
e, (c
onsi
derin
g in
add
ition
par
amet
ers a
s pla
nnin
g an
d co
ntro
l sys
tem
s, te
chni
cal s
yste
m, s
peci
aliz
atio
n, a
nd so
on)
for c
onve
nien
ce re
ason
s we
pres
ent h
ere
a sh
orte
r ve
rsio
n, c
aptu
ring
our m
ain
varia
bles
of i
nter
est.
Cha
pter
3 –
HRM
Sig
nals
62
clas
sific
atio
n
- no
syst
emat
ic re
view
of
empl
oyee
s
-stro
ngly
com
mitm
ent o
rient
ed
Ver
burg
(199
5/20
04)
M
arke
t mod
el
-har
dly
any
deve
lope
d H
RM
po
licy
-few
form
al p
roce
dure
s -o
wne
r/fou
nder
of o
rgan
izat
ion
resp
onsi
ble
for H
RM
-li
mite
d ru
les a
nd re
gula
tions
-h
igh
leve
ls o
f dire
ct su
perv
isio
n -in
form
al
-con
trol o
rient
ed
Mac
hine
mod
el
-em
ploy
ees t
asks
nar
row
ly d
efin
ed
-not
man
y op
portu
nitie
s for
de
velo
pmen
t -la
rge
pers
onne
l dep
artm
ents
-f
orm
al a
nd si
mpl
e re
crui
tmen
t an
d se
lect
ion
proc
edur
es
-com
puls
ory
and
form
al tr
aini
ng
focu
sed
on te
chni
cal s
kills
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Chapter 3 –HRM Signals
63
With regard to HRM the professional bureaucracy and the adhocracy are clearly
focused on commitment of employees. Furthermore, the configurations differ substantially
in the degree to which they are formalized and decentralized and the environment the
organization faces (degree of uncertainty). Summarizing these insights, we developed a
configurational model along the lines of Mintzberg’s classification on organizational
structure and context and extended this classification with insights derived from the work
of Paauwe (1989), Pichault & Schoenaers (2003) and Verburg (1998) on the design of
HRM within these configurations and the notions of commitment HRM as discussed in the
previous section. This leads us to the following model for studying the configurational
approach (table 3-5):
Table 3-5 Configurational approach of this study
1. Simple structure
Organizations than can be characterized as a simple structure are typically young and
small organizations that are starting up. The environment is typically uncertain. The
owner is directly involved in all organizational processes, resulting in a highly
centralized but low formalized organization. Because of its small size, there is
typically no formal HRM within this type of organization and HRM is the
responsibility of the owner. This results in relatively no/little use of formal
commitment HRM practices.
Chapter 3 – HRM Signals
64
2. Machine bureaucracy
Organizations that can be characterized as a machine bureaucracy are typically large
organizations that have existed for a long time (for instance in the manufacturing and
construction sectors). The environment is stable and as a result relatively certain. Big
HRM departments are responsible for HRM, practices are formalized and HRM is
characterized by a strong emphasis on control.
3. Professional bureaucracy
This type of organizations can be found in big service organizations, like universities,
hospitals, and ministries. These organizations are aimed at delivering complex
services in a relatively stable environment. HRM is commitment oriented, focusing on
enhancing skills and motivation of employees, with a strong emphasis on training and
development. Because of the nature of the work, the organization is highly
decentralized.
4. Adhocracy
Organizations that can be characterized as an adhocracy are organizations thriving in a
complex and unstable environment (for instance organizations in informational
technology). As a result of this there is little formalization of rules and procedures and
decision power is highly decentralized. HRM is commitment oriented.
The essence of the configurational approach is that coherence between organizational
elements is important, that context matters. This approach extends commitment HRM by
focusing on the alignment between commitment HRM, organizational structure (in our
study operationalized by the concepts of formalization and decentralization) and
organizational context (in our study: degree of uncertainty). In light of the psychological
contract, these four ideal types are expected to send consistent signals, leading to less
violation of psychological contracts, because employees will have less conflicting
expectations of obligations. This leads us to the following hypothesis:
H3: The more an organization resembles an ideal type, the less psychological contract
violation.
Chapter 3 –HRM Signals
65
3.5 Conclusion
In this chapter we discussed conceptualizations of HRM and various approaches of
studying the signalling value of HRM and structure within organizations. In line with
Spence (1973) and Rousseau (1995), we use the term signals for observable characteristics
attached to the organization that are subject to manipulation by organizations, namely
vehicles organizations use to convey commitments, offer inducements for present and
future behavior (i.e. HRM and organizational structure).
In line with Beer et al. (1984) we defined HRM as involving “all management
decisions that affect the relationship between the organization and employees – its human
resources”. To study HRM within organizations, we followed the distinction within
various domains of HRM by Van Bastelaer & Van Beers (1982), namely: Industrial
relations, Work systems, Development and Human resource flow. The different domains
each show areas of influence of HRM within organizations and represents choices
regarding the management of human resources.
For empirically studying the signalling effect of HRM and structure on the
psychological contract, we discussed three approaches towards studying HRM, two
universalistic or ‘best practices’ approaches and a configurational approach. These three
approaches are expected have different signalling effects on the psychological contract of
employees, leading us to an extended version of our conceptual model (presented in figure
3-2).
Chapter 3 – HRM Signals
66
Figure 3-2 Extended conceptual Model
Amount of HRMpractices
Commitment oriented
HRM practices
Fit between HRM,
structure and context
Control variables individual level, e.g. age, years of work experience in this function
Employee and employer obligations
Psychological contract violation
Control variables organzational level: e.g. sector, age, size
Organizational
levelIndividual level
H1 -/- H2 -/- H3 -/-
H1: The more HRM practices, the less psychological contract violation
Universalistic HRM research gives insights into the role of HRM practices in providing
information about the organizational expectations of the employment relationship. Based
on this kind of research, we concluded that every added HRM practice provides additional
information regarding employee and organizational obligations. This information is
relevant for employees’ assessment of fulfillment of the organization’s obligations, thus
leading to less violation of their psychological contract. Thus the more HRM practices, the
more signals or information sent by the organization, the less violation of psychological
contracts.
H2 The more commitment focused HRM, the less psychological contract violation.
Literature on commitment focused HRM practices helped to build the case for the
relationship between the focus of HRM and psychological contract violation. In line with
the literature on high commitment HRM systems (e.g. Arthur, 1994, Huselid, 1995;
Appelbaum et al., 2000), we expect that commitment HRM practices better align the
interest of employees and organizations than do other practices.
Chapter 3 –HRM Signals
67
The focus on commitment is expected to have a universalistic positive effect on
employees’ psychological contract violation, meaning that independent of the context
commitment HRM has a positive effect. We expect that violation of the psychological
contract can be explained by the degree to which the organization employs commitment
oriented HRM practices
H3: The more an organization resembles the ideal type, the less psychological
contract violation.
In light of the psychological contract, coherence between the signals send by an
organization is seen as important. Based on the configurational approach, we extended the
previous approach on commitment HRM by combining commitment HRM with
organizational structure (formalization and decentralization) and organizational context
(degree of uncertainty). Based on the work of Mintzberg (1979), Paauwe (1989), Verburg
(1998) and Pichault & Schoenaers (2003) we developed a model for studying the
configurational approach, consisting of four ideal types. In light of the psychological
contract, these four ideal types are expected to send consistent signals, leading to less
violation of psychological contracts, because employees will less conflicting expectations
of obligations.
In this chapter we developed our conceptual model and hypotheses. In the following
chapter (chapter 4) we translate our concepts into indicators and measurements. Because
the focus of our study concerns the relationship of concepts at two levels, individual and
organizational, in chapter 4 we also present the appropriate analyzing strategy (multi-
level). The conceptual model and hypotheses as presented in this chapter, their specific
ways of operationalizing and analyzing strategy (chapter 4), provide the input of the results
based on our empirical analysis in (Chapter 5).
68
Chapter 4 – Research Design
69
CHAPTER 4 RESEARCH DESIGN
4.1 Introduction
In this chapter we operationalize the conceptual model and hypotheses presented in
chapter 3. Because the key research issue concerns relationships between variables at two
levels of analysis, namely the individual level psychological contract and the
organizational level HRM, we collected data that has a nested structure and use an
analytical strategy typically for handling such data. In section 4.2 we will discuss theory
and methods for analyzing nested data. In section 4.3 we will propose the analytical
strategy of this research, the design of the study and our research model. Our method for
collecting data and the actual indicators and measures will be presented in the remaining
sections.
4.2 Analysis of data at multiple levels
Multi-level data requirements
The approach of our study is multi-level, in the sense that we are interested in the
relationship between macro level or organizational level concepts (HRM and more general
design factors as structure) and micro-level or individual level concepts (psychological
contract). We, therefore, have to gather data of organizations on HRM, their organizational
structure and the environment of their organization and of individuals within these
organizations concerning their psychological contract. Consequently, our data will have a
nested structure. Rousseau already argued in 1985 for the importance of building and
testing multi-level models in research on organizations. Nowadays there is more interest in
a multi-level perspective on organizations, with authors like Ostroff & Bowen (2000)
arguing that especially in the area of HRM multi-level models are needed.
Multi-level data analysis
In general, we could decide on two options in handling our multi-level data:
(dis)aggregation and hierarchical models. If lower-level data (individual level) is
aggregated, the aggregated variable is expected to measure some phenomenon not evident
at the lower level (Bliese, 2000: 368).
Chapter 4 – Research Design
70
A problem with aggregating the data is that this might result in a group-level variable
with questionable construct validity. Disaggregating on the other hand leads to an
exaggerated sample size (Snijder & Bosker, 1999). Consider for example a two-stage
sample of 10 universities and 100 students per university. In total there are 10 * 100= 1000
students. If we disaggregate the data to the level of students, and estimate a relationship
between characteristics of the university and the students - without taking into account that
there are students who are in the same university - we implicitly assume there are 1000
independent observations, while actually there are only 10 independent observations of
university characteristics.
A more suitable approach to analyzing multi-level data is offered by multi-level
analysis. Multi-level analysis refers to statistical methods that explicitly take account of the
relationships among constructs at multiple levels of analysis (Klein & Kozlowski, 2000).
The main statistical model of handling multi-level theory is the hierarchical linear model.
Hierarchical models
Hierarchical models explicitly recognize that individual within groups may be more
similar to another than they are to individuals in another group and may, therefore, not
provide independent observations (Hofmann et al., 2000: 471).
Hofmann et al. (2002: 489/490) consider the following methodological assumptions
underlying multi-level theory:
• Lower-level units are nested within higher-level units (in our study individuals/
employees within organizations);
• Lower-level units are exposed to and influenced by characteristics and/ or processes of
the higher-level units (in our study HRM and organizational structure influencing
psychological contract violation);
• The outcome variable is measured at the lowest level of interest (in our study is the
dependent variable psychological contract violation measured at the individual level);
• The outcome variable varies both within the lower-level units and between the higher-
level units (as can be translated in an intraclass correlation coefficient >0, as presented
in the following chapter).
Chapter 4 – Research Design
71
According to Snijders & Bosker (1999), multi-level statistical models are always
needed when interested in relationships between constructs at different levels. The
individual and the organization are both considered as sources of variability, and should,
therefore, be modeled not as fixed but as random parts of the model. Specific in multi-level
analyzing is the possibility of assigning the source of the unexplained variance (random
error) in the dependent variable to two levels, organizational and individual level.
Hierarchical models explicitly model both the individual level and the higher
organizational level random-error components thereby recognizing the interdependence of
individuals within the same groups.
Hierarchical relationships occur when events at one level of analysis influence or are
influenced by events at another level of analysis (Hofmann et al., 2000: 468). The reason
for not using more mainstream statistical techniques as Ordinary Least Squares (OLS) lies
in the fact that the observations in multi-level models cannot be seen as independent from
each other (e.g. Hox, 2002). According to Hox (2002:5): “Standard statistical test lean
heavily on the assumption of independence of the observations. If this assumption is
violated (and in multilevel data this is almost always the case) the estimates of the
standard errors of conventional statistical tests are much too small, and this results in
many spuriously ‘significant’ results.”
4.3 Analytical strategy
To allow for a multi-level design we collected nested data, i.e. data of organizations
and individuals within these organizations. In line with multi-level approaches and a
hierarchical way of analyzing our data we propose the following research model, in which
we are interested in relationships between organizational level concepts (structural signals:
amount of HRM activities /commitment HRM/ configurations) and the degree of
psychological contract violation.
Chapter 4 – Research Design
72
Figure 4-1 Research Model
Organization Z
Individual X Individual Y
Organizational
levelIndividual level
Independentvariables
Dependentvariable
• Individual level dependent variable Y= psychological contract violation
• Individual level independent variables X = obligations employee/ obligations
employer
• Organizational level independent variables Z = structural signals (amount of HRM
practices/ commitment HRM / configurations)
The logic of hierarchical models can be viewed as a two-stage procedure (although the
model is estimated simultaneously). Relationships among individual level variables
(psychological contract obligations and violation) are estimated separately for each
organization. The outcome of this first stage is the intercept (and slope terms when
considering cross-level interactions) estimated separately for each organization (Hofmann
et al., 2000). These intercept (and slope) estimates are then used as outcome variables in
the second stage. The equation format of hierarchical linear models is presented in figure
4-2.
Chapter 4 – Research Design
73
Figure 4-2 Equations of multi-level model
Yij = βoj + β1j (Xij) + Rij Β0j = γ00 + γ 01 (Zj) + U0j Represents the main-effect
Β1j= γ10 + γ 11 (Zj) + U1j Represents the cross-level interaction Yij = degree of Y of individual i in organization j Βoj = intercept value for organization j Β1j = regression slope for organization j Rij = random individual error Xij = individual level variable for same individual i in organization j Zj = organizational level measure γ00 and γ10= organizational level intercept terms γ01 and γ11= organizational level slope terms U0j and U1j = organizational level residuals Rij, U0j and U1j are assumed to follow normal distributions with mean 0, and to be independent of each other
In this research our main interest is not in cross-level interactions (for instance the
degree to which HRM will moderate the relationship between obligations and violation of
the psychological contract). A reason for this is that in literature on psychological contracts
and HRM there are no indications for such effects. In a more explorative manner we will
check for the existence of random cross-level interaction. We are thus foremost interested
in the main effect of organizational level HRM and organizational structure on
psychological contract violation. We, therefore, use a basic model of the hierarchical linear
model considering only the random intercept.
Although there are many software packages available for handling hierarchical linear
modeling (for an overview see for instance Snijders & Bosker, 1999) for convenience
reasons we used SPSS 12.
The research design will be translated in specific models (see chapter 5) for the various
approaches we distinguished in studying the relationship between HRM and more general
design factors (as structural signals) and the psychological contract.
Chapter 4 – Research Design
74
4.4 Data collection method
A standard questionnaire was distributed among groups of employees in 49
organizations during the time period 1999-2001. The questionnaire was distributed with
the help of Masters students of the Dutch Open University, who studied HRM and worked
within the organizations in the area of HRM. The students had to make sure their sample
consisted of at least 40 respondents. The students were free to decide which stratification
variables to use (such as individual-, and job characteristics and type of employment
contract). The total number of individual responses was 2099. The questionnaire measured
individual level work attitudes and perceptions of the employment relationship. Besides
these questionnaires, the HRM manager of each organization characterized his/her
organization on a number of predefined dimensions using a standard protocol. Because we
are mainly interested in HRM practices within organizations the HRM manager whose
primary responsibility is HRM, was the one who filled in the questionnaire.
Characteristics organization
The organization characteristics protocol consisted of questions related to the branch of
industry, size and age of the organization, labor force characteristics, HRM practices,
HRM policy, organizational environment, degree of (de)centralization and degree of
formalization. The sample includes organizations from various sectors.
Chapter 4 – Research Design
75
Table 4-1 Sample of organizations: sector
Frequency Percentage in this sample
Percentage according to Statistics Netherlands3
Manufacturing 7 14.3 8.6 Construction 1 2.0 12.0 Trade and hotels 3 6.1 38.6 Transport and information 2 4.1 5.2 Professional service 12 24.5 24.4 Health care 3 6.1 7.9 Public service 14 28.6 12.0 Energy 3 6.1 0.1 Other 4 8.2 Total 49 100
Individual level perceptions
The second element of our study was a survey amongst individual employees. The
survey consisted of questions about individual characteristics and job characteristics,
employee and employer obligations and the fulfillment of these obligations, commitment
and intention to leave.
In total 2099 respondents filled out the questionnaire. 67.2 % were male and 32.8%
female. Comparing demographics on male/female, this sample resembles the population
demographics as reported by the organizations (68.7 % male versus 31.3 % female). The
education level of the respondents was relatively high: 43 % of the respondents had a
higher professional or university education. 71.6 % of the respondents worked in non-
leadership positions. Most employees where working in open-ended contracts (86.8%), of
which 80% on fulltime basis.
3 Source: Statline 2000 (the online database of Statistics Netherlands
Chapter 4 – Research Design
76
Sample considerations
Although the sample was not entirely representative for the Dutch situation, it includes
a diverse sample of organizations and employees. For the focus of our research (exploring
relationships), representativeness of our sample for the Dutch population is not required.
In order to be able to generalize our findings concerning the relationship between the
variables of interest it is required that there is enough variation in the specific variables we
are interested in (which is the case as will be presented in the following sections).
Concerning the required sample size, to be on the safe side in multi-level research one
needs at least 30 organizations with 30 individuals per organization to make sure that the
organizational level variance is not underestimated (Maas & Hox, 2000). This condition is
satisfied because we collected data of 49 organizations, with approximately 40 individual
employees per organization.
4.5 Individual level measurement: psychological contract
In this research we are studying the psychological contract in line with the
conceptualization of Rousseau. In chapter 2 we defined the psychological contract as: “an
individual’s belief, shaped by the organization, regarding reciprocal obligations”.
According to Rousseau (1990:309), psychological contracts differ from the more general
concept of expectations in that contracts are promissory and reciprocal, offering a
commitment to some behavior on the part of the employee, in return for some action on the
part of the employer. We operationalized the psychological contract in line with this
conceptualization of Rousseau (1990), as can be seen in table 4-3. The specific items were
translated in Dutch and tested by Schalk & Freese (1997).
Scale construction
Psychological contracts consist of three elements, individual perceptions regarding
individual obligations towards the organization, perceived obligations of the organization,
and the perceived fulfillment or violation of the organization’s obligations.
Chapter 4 – Research Design
77
In line with this definition of Rousseau and previous research, we constructed three
scales of the psychological contract items. As can be seen in table 4-2 the reliabilities of
the scales (Cronbach’s alpha’s) were sufficiently high. These three scales were confirmed
by evidence gained from factor analysis.
Table 4-2 Scale construction psychological contract
Scale Obligations
employee Obligations employer
Psychological contract fulfillment Dependent variable
Range 1-5 1-5 1-5 Mean 3.7 4.0 3.0 SD 0.48 0.48 0.55 Nr. of items 10 10 10 Minimum 1.6 1 1 Maximum 5 5 5 Cronbach’s alpha 0.71 0.82 0.84 Valid Observations
2095 2096 2086
The first part of the psychological contract measure consists of 10 perceived employee
obligations, asking respondents (on a five-point scale ranging from 1 “not at all”, to 5
“very highly”) to what extent they believe they are obliged to provide the organization
with, for example, the following items: willingness to accept a transfer; to provide good
service; voluntarily perform non-obliged tasks; working extra hours; to deliver good work
in terms of quality and quantity.
The second part consists of 10 perceived employer obligations, asking the respondents
(using the same five-point scale) to what extent they believe their employer was obliged to
provide them with for example the following issues: training and development; respect;
candid and fair treatment; job and income security. The content of the psychological
contract consists of the various perceived employer and employee obligations.
Chapter 4 – Research Design
78
In line with this Rousseau-measure, we used a multi-item measure of perceived
fulfillment (or breach/violation4), which is the third part of the psychological contract
measure, consisting of 10 items, asking the degree to which respondents perceive
employers to have (not) fulfilled their obligations on a five point scale from 1 “less than
expected” to 5 “more than expected” (see table 4-3).
Consistent with previous research (e.g. Robison & Roussseau, 1994; Turnley &
Feldman, 2000) the majority of respondents (50.4 %) experienced some degree of violation
(a score of less than 3 on the 5-point scale). The measure of psychological contract
fulfillment provides us with a good indicator of the degree of psychological contract
violation (as discussed in chapter 3). In general we assume, the higher the score of
fulfillment, the lesser the degree of psychological contract violation.
4 . As discussed in chapter 3, we do not make a distinction between breach and violation. We will use the terms breach and violation both for indicating a situation in which employees perceive the obligations of the employer as not being completely fulfilled.
Chapter 4 – Research Design
79
Table 4-3 Overview indicators psychological contract
Psychological Contract measures Employee obligations Work well with others Accept external transfer Provide advance notice if taking a job elsewhere Protect confidential information Provide good service Volunteer to do non-required tasks Work extra hours Accept internal transfer Not support competitors Deliver good work quality and quantity Employer obligations Job that is challenging and stimulating Opportunities for promotion Training and development Good work climate Respect Open and direct communication Candid and fair treatment Bonuses based on performance Job and income security A competitive salary Fulfillment employer obligations Job that is challenging and stimulating Opportunities for promotion Training and development Good work climate Respect Open and direct communication Candid and fair treatment Bonuses based on performance Job and income security A competitive salary
Chapter 4 – Research Design
80
4.6 Organizational level measurement: HRM, structure and context
In line with Spence (1973) and Rousseau (1995), we defined structural signals as
observable characteristics attached to the organization that are subject to manipulation by
organizations and which are used to convey commitments and offer inducements for
present and future behavior. This definition includes elements of organizational structure
as well as HRM. First we provide an overview of the various elements of organizational
structure and organizational context and after that we provide an overview of the measure
of HRM and the measures of the three models we consider in this study.
4.6.1 Measures of organizational structure
Regarding organizational structure we focused in line with the work of Mintzberg
(1979) on the indicators that are most often used, namely the degree of decentralization
and formalization. These measures were based on the work of Hoeksema (1995) who
translated the original scales of Miller & Droge (1986) into Dutch.
Decentralization
According to Pugh et al. (1963: 304) “(De)centralization concerns the locus of
authority to make decisions affecting the organization”. The measure of decentralization
consists of 11 items. The respondents have to indicate at what level the authority to make
certain decisions is located, on a 6 point scale ranging from “0 = level above that of chief
director; 1= chief executive; 2 = division/functional manager; 3 = sector or sub-department
head; 4 = first level supervisor; 5 = operating core” (see table 4-4). Examples of decisions
were the number of workers required; whether to employ a worker; internal labor disputes;
dismissal of a worker; allocation of work among available workers.
Chapter 4 – Research Design
81
Table 4-4 Indicators of the degree of (de)centralization
Indicators of degree of (de)centralization a. the number of workers required g. dismissal of a worker b. whether to employ a worker h. methods of personnel selection c. internal labor disputes i. work methods to be used d. overtime to be worked at shop level j. machinery or equipment to be used e. delivery dates and priority of orders k. allocation of work among available
workers f. production plans to be worked on
Scale construction
In line with Miller & Droge (1986) and Hoeksema (1995) we constructed a scale of
(de)centralization by computing the mean of the total of scores of the underlying items.
The higher the score on this measure, the more decentralized the organization. The
reliability of the scale was sufficiently high (Cronbach’s alpha = 0.82) as presented in table
4-6.
Formalization
According to the definition of Pugh et al. (1963:303) formalization distinguishes to
which extent communications and procedures in an organization are written down and
filed. The measure of degree of formalization consists of 5 items (as can be seen in table 4-
5). Respondents are asked which documents are used in their organization, for example:
who received information booklets about, for example, security, working conditions; who
received an organization chart; for what functional levels written job descriptions were
made; whether the organization had a written business policy.
Table 4-5 Indicators of the degree of formalization
Indicators of Formalization Scale a. written contract of employment Dichotomous (yes/no) b. information booklets treating, for example security, working conditions, etc., are given to: - no one - only a few persons - many - all
4 point scale, in which 0=no one. And 3=all
Chapter 4 – Research Design
82
c. an organization chart is given to: - chief executive only - two top executives - C.E. and most division or department heads - all supervisors
4 point scale, in which 1= chief executive only, and 4 = all supervisors
d. written job descriptions are made for: - direct production workers Dichotomous (yes/no) - clerical workers Dichotomous (yes/no) - supervisors Dichotomous (yes/no) - specialists Dichotomous (yes/no) - chief executive Dichotomous (yes/no) e. In your firm is there: - a written business policy Dichotomous (yes/no) - a written manual of procedures and fixed rules Dichotomous (yes/no) - written operating instructions to workers Dichotomous (yes/no)
Scale construction
In line with Miller & Droge (1986), we constructed a scale of formalization by adding
up all scores on the total of 11 items of the five subscales. The higher the score on this
measure, the more formalized the organization. The reliability of the scale was acceptable
(Cronbach’s alpha = 0.67) as presented in table 4-6.
Table 4.6 Descriptives of the organizational level structure scales
Decentralization Formalization Range 0-5 1-16 Mean 3.0 14.6 SD 0.56 2.0 Min 1.82 6 Max 4.09 16 Nr. Of items 11 11 Cronbach’s alpha 0.82 0.67 Valid observations 39* 46
* defined for organizations that answered at least 9 of the 11 items
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4.6.2 Measurement of context
Regarding possible contingency factors, we focused in line with the work of Mintzberg
(1979) on the indicator that is most often used, namely the degree of uncertainty. The
measure was based on the work of Hoeksema (1995) who translated the original scales of
Miller & Droge (1986) into Dutch.
Degree of uncertainty
Degree of uncertainty consisted of 4 items. Uncertainty is a measure of the
organization’s external environment and reflects the degree of change and unpredictability
in market-related and technological dimensions (Miller & Droge, 1986: 547). We asked
respondents to indicate the situation of the organization regarding the following items
(table 4-7).
Table 4-7: Indicators of the degree of uncertainty
Our organization rarely has to change its activities to keep up to date
1 2 3 4 5 Our organization must change its activities continually to keep up to date
The rate at which our services becomes obsolete is very slow
The life-cycle of our services is very short
Assignments and whishes of customers are easy to predict
Assignments and whishes of customers are difficult to predict
Our working methods are not subject to very much change
Our working methods change continually and often in a major way
Scale construction
In line with Miller & Droge (1986) we constructed a scale of uncertainty by computing
the mean of the total of scores on the underlying items. The higher the score on this
measure, the more uncertain the environment of the organization. As presented in table 4-8
the reliability of the scale (Cronbach’s alpha = 0.80) was sufficiently high.
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Table 4-8: Descriptives of degree of uncertainty
Uncertainty Range 1-5 Mean 2.9 SD 0.96 Min 1 Max 5 Nr. Of items 4 Cronbach’s alpha 0.80 Valid observations 43
4.6.3 Measures of HRM
In the previous chapter we distinguished between three approaches towards studying
structural signals, namely two universalistic approaches and a configurational approach. In
this section we provide an overview of the specific measures of HRM in line with these
three approaches.
As stated in chapter 3, HRM consists of various areas or domains. To capture these
domains, we based the measurement of HRM on the activity list developed by Buitendam
(1979). This list of activities was used by Paauwe (1989) in his study in which he
employed a configurational perspective towards HRM and by Van Bastelaar & Van Beers
(1982) in studying stress within organizations and the role of HRM or personnel
department. The items cover the four domains of HRM as presented in Chapter 3. An
important advantage of this list of practices is that it specifically applies to and is tested in
a Dutch context (Van Bastelaers & Van Beers, 1982). Although the list of Buitendam is
developed in 1979, it includes the major practices which are considered to be HPW
practices or commitment enhancing practices, which are the focus of contemporary
research towards the relationship between HRM and performance (as the degree to which
HRM departments pay attention to or accompany training, communication, job rotation,
employee benefits, job rotation and so on). The list consists of 24 items and is presented in
table 4-9. Respondents had to indicate some form of presence/absence of HRM practices
on a three point scale, ranging from “happens regularly” to “happens incidentally” to
“never or almost never happens.”
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Table 4-9 Indicators and descriptions HRM
Indicator Definition 1. Staff planning: long Estimation of staff need quantitatively and qualitatively,
over a period of a half year or longer 2. Staff planning: short Estimation of staff need quantitatively and qualitatively,
over a period of less than 6 months 3. Recruitment and
selection Identification of sources of potential workers outside the organization using recruitment and selection methods
4. Stakeholder organizations
Establishing and maintenance of relations with stakeholders organizations (employers - and employee organizations) concerning the determination of employment conditions
5. Preparation of labor agreements
Designing of (components of) the package of employment conditions or of employment regulations (for example reward -, work - or function classification systems); preparation of negotiations with stakeholder organizations
6. Labor agreements Application of and/or the control on the implementation of labor agreements. execution of pension schemes, social insurance legislation, gratifications, savings schemes, profit-sharing, etc.
7. Job classification Job analysis, task description, work - and function classification
8. Staff appraisal Application of and/or assistance in appraisal procedures 9. Placement Placement, reassignment, dismissal and procedures 10. Task-oriented training Instruction, specific education for work, apprentice systems 11. General training Introductory training and shaping of non-managerial staff;
social development training for young employees (not task-oriented); study advice
12. Training and development of managerial staff
Management training and - development (leadership programs etc.)
13. Careers Career planning, career support, job rotation; partly based on staff appraisal and/or potential assessment
14. Social support Individually based personnel support, social work, personal conversations, support of foreign employees etc.
15. Analysis personnel data analysis of data from the personnel data bases for training, courses; to localize and fight sickness absence, turnover, etc.
16. Social research Design and/or execution of research, for example labor market analyses, communication research, attitudinal surveys
17. Task structuring and job consultation
Development and/or application of task - and responsibility enlargement and/or discussion of progress
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18. Organizational development
Support of organizational change processes, group - and/or departmental consultation, internal organizational consultancy
19. Development and formulation of social policy
Formulation of social policy, social objectives or directives
20. Works council Organization and support of works council work (preparation election, secretary function, shaping activities for work council members)
21. Contacts with trade unions
Contacts with trade union representatives concerning the company situation and specific subjects such as application of labor agreements, dismissal procedures, reorganizations
22. Working conditions Activities related to the physical and mental well-being work safety etc.
23. Internal communication and information
Introduction booklets, company magazine, notice boards, suggestion box, informative (personnel) meetings
24. Personnel care Housing, canteen, jubilees, sick-call, entertainment activities, personnel transport
Universalistic approaches
Amount of HRM practices
With regard to the first approach, the best practices or universalistic approach, we
concluded that every added HRM practice provides additional information regarding the
(fulfillment of) organizational obligations and what employees are expected to contribute
in return. This information is relevant for employees’ assessment of fulfillment of the
organization’s obligations, thus leading to less violation of these expectations. Thus the
more HRM practices, the more signals or information sent by the organization, the less
violation of psychological contracts.
Scale construction
We operationalized this measure of HRM (in line with the work of amongst others
Guest & Conway, 2002) by adding the number of HRM practices employed by the
organization, ranging form 0-24 practices, resulting in the HRMCOUNT measure. This
scale counts how many of the 24 HRM activities are employed regularly. For descriptives
of this scale see table 4-10.
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Table 4-10 Descriptives of HRM COUNT scale
HRMCOUNT Range 0-24 Mean 14.7 SD 4.22 Min 3 Max 22 Nr. Of items 24 Valid observations 43
HRM Commitment
The second universalistic approach focuses on commitment practices. The work of
Buitendam (1979) and Van Bastelaers & Van Beers (1982) provides us with an overview
of practices in four domains of HRM (see table 3-1). Organizations focusing on
commitment HRM consciously pay attention to and invest in their human capital. HRM
practices are aimed at motivation of employees by increasing their skills and involvement.
In this study commitment HRM is defined in line with the work of amongst others
MacDuffie (1995) and Becker & Huselid (1999), as the attention paid to the two domains
of Van Bastelaer & Van Beers (1982): Development of HRM policy and organizational
development and Work systems (see table 4-11).
Table 4-11 Overview indicators of HRM commitment
Domains Items Descriptives Work systems: 10. taks-oriented training
11. general training 12. training and development of managerial staff 14. social support 24. personnel care
Development of HRM policy and organizational development
16. social research 17. work design and consultation 18. Organizational development 19. development and formulation of social policy
Nr of items: 9 Min: 1.00 Max.: 2.28 Mean: 1.53 S.D.: 0.32
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Scale construction
We have defined HRM commitment as consisting of the practices of the domains:
Development of HRM policy and Work system. We calculated HRM commitment by
computing the mean of these two domains. This HRM commitment variable (hrmcom) is
used in further analysis of the relationship between HRM and psychological contract
violation.
Configurations
For building a model capturing the configurational fit approach we developed ideal
types of combinations based on the work of Mintzberg (1979), Paauwe (1989), Verburg
(1998) and Pichault & Schoenaers (2003) consisting of: formalization, decentralization,
degree of uncertainty and HRM commitment. In line with these studies, we provided an
overview of the measurement of the ideal types that will be considered in this research (see
table 4-12).
Table 4-12 Ideal types, measurement of four configurations (same as table 3-5)
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Scale construction
We first calculated cluster means for the four Ideal Types. To control for the influence
of divergence in ranges of the four scales, we standardized the four scales to scales with a
similar range (min=0, max=5). The extreme values (theoretical maximum and minimum)
were used to indicate the initial clusters (simple structure, machine bureaucracy,
professional bureaucracy and adhocracy).
Table 4-13 Initial cluster centers
Based on these ideal types (table 4-13), we can identify clusters of organizations that
actually resemble these ideal types. We performed a k-means cluster analysis procedure,
which is a cluster analysis in which the number of clusters is decided in advance.
Subsequent clustering leads to optimization of the predefined clusters with the data. As a
result of incomplete questionnaires on the variables of interest, not all organizations were
taking into consideration resulting in 14 organizations missing).
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Table 4-14 Number of organizations in each cluster
Cluster Simple structure 0 Machine bureaucracy 2 Professional bureaucracy 31 Adhocracy 2
36 Valid Missing 14
This resulted in the final cluster centers (as can be seen in table 4-15).
Table 4-15 Final cluster centers
For each organization, we then calculated a variable, measuring the distance between
the closest ideal type and the actual situation of the organization. This distance variable
(dis1) with a Min. = 2.68, Max. = 5.36, Mean = 4.01 (SD 0.67) is used in further analysis
the relationship between this model and psychological contract violation.
4.7 Control variables
In research on the psychological contract we found (theoretically or empirically based)
indications of associations between several variables and the psychological contract.
Because in this study we are interested in the influence of characteristics of organizations
on the psychological contract (violation), we have to control for the influence of other
relevant variables on the psychological contract.
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Based on this previous research (as presented in chapter 2) we can distinguish between
the following potentially relevant control variables on which we have information
available:
Table 4-16 Potential control variables
Individual level Organizational level -Gender -Age -Level of education -Union membership -Contract status -Position: manager/ worker -Years of work experience -Years of work experience in this organization -Years of work experience in this function
-Sector -Age organization -Size (truncated at 150) -Level of education (share of employees with HBO/WO) -Degree of uncertainty -Degree of decentralization -Degree of formalization
The decision whether to include each of these potential control variables is based on an
explorative analysis as presented in the following chapter.
4.9 Conclusions
In this chapter we provided an overview of the definitions, measurements and
indicators for our concepts, thereby operationalizing the various constructs of this research.
Because the specific nature of our research approach requires an analytical strategy which
is not very common in contemporary research on the psychological contract or HRM, in
this chapter we discussed our analytical strategy resulting in our research model and the
collection of our sample. In the next chapter we will provide the results of our analysis.
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CHAPTER 5 RESULTS
5.1 Introduction
The aim of this chapter is to answer the research questions and to test the hypotheses as
presented in the previous chapter. The first section focuses on preparing the data for multi-
level analysis (5.2). Before fitting the three models for answering our hypotheses (sections
5.5 – 5.7), we first determine the so-called empty model (5.3) and two baseline models
(5.4). The empty model is used to determine to which extent the variation in the dependent
variable (fulfillment) is related to individual level and organizational level characteristics.
When the empty model is extended with relevant control variables, it changes into a
baseline model. By comparing the results of the final models with the results of the
relevant baseline models, we will be able to test several of our hypotheses. After this, we
present the three final models. In section 5.5 we develop the random intercept model for
the universalistic approach. In section 5.6 we consider the random intercept model for the
commitment approach and in section 5.7 the configurational approach. In section 5.8 we
discuss general comparisons of the outcomes of the three estimated models.
Data considerations
Alternative scaling of variables
To facilitate the interpretation of the intercept term, we can decide on alternative scales
for the predictors. To be able to interpret the estimate of the intercept as ‘the expected
value for the dependent variable (fulfillment) for a randomly drawn individual in a
randomly drawn organization’, we used the alternative scaling option grand-mean
centering. When a variable is centered around the grand mean, the grand mean is
subtracted from each individual score on that variable. In our dataset we grand mean
centered the HRM scale and the following organizational level control variables: age of an
organization, organizational size, level of education, degree of uncertainty, degree of
decentralization and the degree of formalization (see table 5-1).
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Table 5-1 Overview of variables and alternative scales
Individual level Organizational level Dependent variable
-Fulfillment/violation of obligations^
Independent variables
-Obligations employee (independent variable) -Obligations employer
-HRM activities +/ HRM commitment +/ Configurations
Control variables
-Gender* -Age# -Level of education** -Union membership* -Contract status -Position: manager/ worker * -Years of work experience # -Years of work experience in this organization# -Years of work experience in this function#
-Sector** -Age organization (truncated at 150)+# -Size+# -Degree of uncertainty + -Degree of decentralization+ -Degree of formalization+
* = Dummy variable
** = Categorical variable
+ = Centered around the grand mean
# = To allow for the possibility of a non-linear relationship, the logarithm is taken into
consideration
^ The measure of psychological contract fulfillment provides us with an indicator of the
degree of psychological contract violation. In general we assume, the higher the score of
fulfillment, the lesser the amount of psychological contract violation.
Within and between group components of individual level variables
In multi-level models it is common to distinguish a within and between group
component for individual level variables. This is especially relevant when one expects that
the within-group effect on the dependent variable may differ from the between-group
effect. If this is the case, and if the relevant variable shows both within-group and
between-group variation, one could decide to split the specific variable into a within-group
and a between-group component. The between-group component would be obtained by
aggregating the variable, while the within-group component would be defined as the
difference between the individual score and the average organizational score.
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In this study there are no (theoretically founded) a priori arguments that suggest that
the within-group effect may differ from the between-group effect for the variables which
we focus mainly on (i.e. perceived employee obligations and perceived obligations of the
organization), so we will not explore this option in this study5.
Correlations
For all variables included we inspected the correlations. Since high correlations may
indicate strong bivariate relationships and result in multicollinearity in regression analysis,
we particularly looked for high correlations. Only one correlation turned out to be above
0.50: the correlation between formalization and the (amount of HRM practices) hrmcount
measure (0.56). This high correlation is a result of the influence of 1 outlier. We excluded
this outlier from further analysis, resulting in a lower correlation of 0.40.
Open ended contracts
Several studies investigate the difference in work and psychological contract
perceptions between employees with open ended and a variety of flexible contracts (e.g.
Koene & Van Riemsdijk, 2005). HRM studies suggest that different HRM systems exist
for different types of contract (e.g. Lepak & Snell, 1999). We limit our analysis to
employees with open-ended employment contracts. More than 86 % of our respondents are
working in open-ended contracts. From a theoretical point of view, this has the advantage
that we do not have to control our results for the type of contract (i.e. our sample consists
of a homogeneous group in this respect). From a more practical point of view, we are faced
with the limitation that, on organizational level, our dataset does not include information
on whether HRM policies and/or practices differentiate between types of contract.
The structuring of the following sections is based on insights derived from the work of
Hox (2002), Singer (1998) and Snijders & Bosker (1999) which provided us with a
practical line of reasoning for fitting the various models to our data.
5 For some of the control variables, arguments may exist that suggest different within- and between group effects. However, since these control variables are not the primary focus of our research, we will not elaborate this issue.
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5.3 The empty model
The first model to develop and analyze is the so called empty model or unconditional
means model. This model does not contain any explicit explanatory variable. It is the
starting point for the analysis because it provides us with the basic partition of variability
in the data between the two levels (Snijders & Bosker, 1999: 46).
The empty model is used to estimate both the fixed effect (the average score on
fulfillment) and the within and between group difference. These within and between group
differences can be used for calculating the intraclass correlation, which represents the
degree of dependency or the share of the total variance that is related to variation between
organizations. The most basic condition that has to be satisfied when analyzing data with
multi-level techniques is that there should be enough between organizational variance in
the dependent variable (intraclass coefficient>0). This condition can be evaluated by
estimating the empty model. Standard statistics like OLS do not take into account the
weighting of the various organizations, but instead take the average of all organizations,
thereby assuming an intraclass correlation of 0. An intraclass correlation that is greater
than 0, indicates that standard statistics would likely lead to misleading results (Singer,
1999: 330), as we will show in section 5.8.
Since the empty model does not contain any explanatory variable, it can be expressed
by the following equation: Yij = γ00+ U0j + Rij (5.0)
Interpretation of the equation
Psychological contract fulfillment is in this model considered as a linear combination
of: a grand mean γ00; a set of deviations from that grand mean of organizational j (U0j),
which represents the random error associated with the organizational level; and a random
error associated with individual i within organization j, or the random effect at the
individual level (Rij).
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γ00 is the population grand mean or the intercept, representing the expected value of
the outcome measure (fulfillment) for a randomly selected individual (employee) i from a
randomly selected organization j. Organization j has thus a true mean of γ00+ U0j and
each individual within this organization deviated for this true mean by Rij.
This model contains three parameters that can be estimated: a fixed effect (γ00) and
two variance components, namely the variance between organizational means (τ00) and
variance among individuals within organizations (σ2). The total variance in fulfillment of
any individual employee equals σ2 + τ00. The empty model thus does not explain any
variance in the dependent variable, but rather decomposes the variance in two independent
parts, a between organization and a within organization part. This enables us to estimate
the intraclass correlation as follows: ρ= τ00/ (τ00+σ2).
Results
The results of fitting this unconditional means or empty model are presented in table 5-2.
Table 5-2 Estimates of fixed effects and covariance parameters for the empty model
Model: M0: Empty model Fixed part: Predictor
Intercept
coefficient 2.94***
standard error 0.03
Random part:
σ2 0.26 0.01 τ00. 0.04 0.01 Test: -2 Log Likelihood
2771.551
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Fixed part
The estimate of the intercept γ00 is 2.94, which can be interpreted as the expected
value for fulfillment (on a scale ranging from 1-5) for a randomly drawn individual
(employee) i in a randomly drawn organization j.
Random part
In this model we found that the estimated value of the random component of the model
σ2 is 0.26 (within group difference) and the estimated value of the random components of
the model τ00 is 0.04 (between group difference). The total variance in fulfillment can be
calculated by taking the sum of the between group and within group variance (τ00 +σ2),
which equals 0.31. This results in an intraclass correlation of 0.14. According to Snijders
& Bosker (1999:46) values between 0.05 and 0.20 are common in this type of research.
This suggests that the intraclass correlation of 0.14 in our study can be interpreted as
relatively high. It suggests that there is a considerable amount of variation in fulfillment
that is due to organizational level effects (14%). In the following models we try to explain
part of this organizational level variance by including organizational level variables, such
as HRM.
Tests
When using multi-level modeling there is a main statistical assumption to be tested,
concerning the independence and normality of the distribution of the random errors
(Hofmann et al., 2000). Based on a plot of the random errors against their normal scores,
we can conclude that this test was satisfying; the random errors were normally distributed.
In order to be able to compare the estimated models statistically based on the deviance
statistics, we used the full maximum likelihood (ML) estimation procedure. The deviance
of the model indicates how well the model fits the data (Hox, 2002:16).
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Deviance is a function of the likelihood, and is defined as –2Log Likelihood. Since this
measure does not have a maximum, the absolute value of the deviance measure does not
include much information6. However, in the case of nested models (where one model can
be seen as an elaborate version of another model) it can be used to determine whether the
elaboration of the baseline model significantly increases the amount of explained variance.
Models with a lower deviance fit the data better than models with a higher deviance. The
deviances of nested models can be used to compare their statistic fit. A chi-square test can
be performed to test whether the more general model fits significantly better than the
simpler model (Hox, 2002: 16).
Conclusion
Given that there is systematic between unit variance we are able to reject the null
hypothesis that organizational effects on the degree of fulfillment of an individual’s
psychological contract are absent.
The purpose of this chapter is to arrive at a model that is interesting for answering our
main question and describes the observed data to a satisfactory extent. To test the
difference between two models based on a chi-square deviance test, the models should be
nested. To test the hypotheses concerning the variation explained by the variables we are
interested in (HRMcount, HRM commitment, Configurations), we need to develop
baseline-models which can serve as a benchmark to which the other models are compared.
The reason for not using the empty model for this purpose is that (based on theory) we
will also include control variables in our final models and we want to extract only the
importance of including the variable we are interested in. In the next section we gain
insight into potential control variables and estimate these baseline-models.
6 For measures with a maximum (such as a correlation or the R2-value of a regression equation, which both have an upper bound of 1), the absolute values contain more information.
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5. 4 Baseline models
To assess potential relevant control variables we estimated a random coefficient model,
with individual fulfillment as dependent variable and obligations employee and obligations
employer as individual level independent variables and the variables as mentioned in table
5-1 as potentially relevant control variables.
Control variables were included in the baseline models if they explained part of the
variability of fulfillment in these explorative regressions. Due to the focus of our research
question and the fact that we did not have theoretical arguments to assume random slopes,
at this point we only considered random intercepts leading us to estimating a random
intercept model (in section 5.8 we check for random slopes of the various models).
Furthermore, to allow for the possibility of non-linear relationship between several control
variables and the level of fulfillment, we calculated the logarithm of the following
variables: years of work experience, years of work experience in this organization, years of
work experience in this function, age organization, size organization.
We decided to include the control variables in our baseline models if they were
significant at a 5% confidence level. Furthermore, we decided to include the variables
‘degree of decentralization’ and ‘degree of uncertainty’ based on theoretical arguments
(important variables of interest in this study as discussed in chapter 3), leading us to the
following control variables:
Table 5-3: Overview of control variables
Individual level control variables Organizational level control variables - years of work experience in this function - employee age7
- size of the organization - age of the organization - level of formalization - sector - degree of uncertainty - degree of decentralization
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Including these control variables lead to the baseline models, with which we can
compare more complex models for answering our hypotheses. Although the empty model
provided us with a starting point for multi-level analysis, we need two extended models to
which we can compare the more complex models (amount of HRM practices (HRMcount)/
HRM commitment/ configurations).
The reason for estimating two models lies in the fact that when comparing models,
models should be nested in structure and the complex models are not nested in each other
(i.e. have different baseline models). Whereas in the HRMcount and HRM commitment
model the variables degree of decentralization, formalization and uncertainty are
considered as control variables, in the configurational approach they are considered as part
of the explanatory variable. This leads us to estimating two baseline-models (see table 5-
4).
The first baseline model will be used to compare the models estimated for answering
the first two hypotheses concerning the relationship between the amount of HRM practices
and HRM commitment systems and the degree of psychological contract violation. The
second model (baseline – model configuration) will be used as a baseline to which we can
compare the model estimated for answering the third hypothesis. The first baseline model
is nested in the second baseline model. The main statistical assumption, concerning the
independence and normality of the distribution of the random errors (Hofmann at al.,
2000) was tested and satisfying.
In the following sections we estimate the random intercept models answering the
hypotheses as formulated in the previous chapter.
7 Although the logarithm of age was significant in the model which included all the control variables, in the base-line model it was not significant.
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Table 5-4 Estimates of fixed effects and covariance parameters for the baseline-models
Baseline -model HRM Baseline -model Configuration Fixed part: Predictor
coefficient standard error coefficient standard error
Intercept 1.94*** 0.32 1.70*** 0.30 Individual level
Obligations employee
0.33*** 0.03 0.36*** 0.03
Obligations employer -0.05 0.03 -0.05 0.03 Age employee 0.06 0.07 0.06 0.06 Years of experience in this function
-0.08*** 0.02 -0.08*** 0.02
Organizational level
Size organization -0.09* 0.04 -0.04 0.03 Age organization 0.08 0.04 0.06 0.03 Degree of formalization
-0.06*** 0.02
Degree of decentralization)
0.11 0.06
Degree of uncertainty -0.00 0.04 Sector 0.06# 0.10#. Random part: σ2
0.23
0.01
0.23
0.01
τ00. 0.02 0.01 0.03 0.01 Tests -2 log Likelihood AiC
1749.877 1789.877
2191.880 2225.880
* p<0.1 *** p<0.01 ** p< 0.05 # level of significance of F-test
5.5 Random intercept model 1
In this model we are interested in the relationship between the amount of HRM
practices employed (HRMcount) and the degree of psychological contract violation of
individuals. With this model we want to test the first hypothesis: The more HRM practices,
the less psychological contract violation.
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This model is formulated as follows: fulfilij = βoj + β1j(obl_workij) + β2j(obl_orgij) +β3j(age_logij)+ β4j(logwfunij) + Rij (5.1a)
Βoj = γ00 + γ 01(logsiz_mj) + γ 02(logfag_mj) + γ 03 (formal_mj) + γ 04(decent_mj) +
γ 05(uncert_mj) + γ 06(sectorj) + γ 07(hrmcou_mj) + U0j
Results
The results of fitting this random intercept model are presented below.
Table 5-5 Random intercept model 1
Model: M1 HRMcount model Fixed part: Predictor
coefficient standard error
Intercept 1.99*** 0.30 Individual level
Obligations employee (obl_work) 0.33*** 0.03 Obligations employer (obl_org) -0.05 0.03 Age employee (age_log) 0.03 0.07 Years of experience in this function (logwfun)
-0.08*** 0.02
Organizational level
Size organization (logsiz_m) -0.14*** 0.03 Age organization (logfag_m) 0.12*** 0.03 Degree of formalization (formal_m) -0.10*** 0.02 Degree of decentralization (decent_m) 0.07 0.05 Degree of uncertainty (uncert_m) 0.01 0.03 Sector (sector) 0.00# HRMcount (hrmcou_m) 0.04 *** 0.01 Random part: σ2
0.23
0.01
τ00. 0.01 0.00 Tests -2 Log likelihood AiC
1732.026 1774.026
* p<0.1 *** p<0.01 ** p< 0.0 5 # level of significance of F-test
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Interpretation of the output
Fixed effects (based on t-test)
The parameter estimate of the organizational level explanatory variable HRMcount is
0.04, which is significantly positive at a 1% confidence level. This tells us that a unit
increase in the variable HRMcount results in an increase of 0.04 in the dependent variable
fulfillment. Stated differently: for each added HRM practice the average level of violation
goes down with 0.04 (which is 1% of the possible range in fulfillment). Because the actual
values of the scale of the amount of HRM practices ranged from 3-22, the predicted
difference between the organization with the least HRM practices and organizations with
the most HRM practices is (19* 0.04=) 0.76 point on the violation score (which is a
difference of 19 % in degree of fulfillment).
Random effects
In this model we found that the estimated value of the within-group difference σ2 =
0.23 (compared with to the baseline model 0.23) and the estimated value of between-group
difference τ00 = 0.01 (compared with the baseline- model 0.02). These findings indicate
that including the variable the amount of HRM practices explains part of the
(organizational level) variance in fulfillment.
Tests
When comparing models to their baseline-models, t-test and deviance-test are being
used. We only reject the null-hypotheses if the t-test as well the deviance test is significant.
To be precise, the deviance test can be used to test the null hypothesis that for each of the
additional variables8 the model parameter is equal to zero. Under this condition, the
difference in deviance between the two nested models has a chi-square distribution with
degrees of freedom equal to the number of additional parameters in the enlarged model. As
it turns out, χ2 = (1749.877-1732.026 =) 17.851. Since the enlarged model only includes
one additional variable, this test statistic has one degree of freedom.
8 Additional as compared to the baseline model
Chapter 5 – Results
105
The associated probability level equals p< 0.000, and we can thus conclude that this
model fits the data better than the baseline-model. Including the amount of HRM practices
adds significantly in explaining the degree of psychological contract violation, compared
to the variables already included in the baseline-model. For this model, both the t-test as
well as the deviance test are significant, which indicates that the null-hypothesis can be
rejected.
The proportion of total variance explained by this model at organizational level is 0.01.
In comparison with the baseline model, the HRM count variable accounts for 62% of the
variance at organizational level that remains after the control variables have been added.
This means that 62% in the variation of psychological contract fulfillment that is due to
organizational level effects can be influenced by the amount of HRM practices. The
consequence of our operationalization of HRM in which we used an additive index, is that
our results suggest HRM practices have independent non-overlapping effects on the
psychological contract. Furthermore, using more practices results in a lower level of
violation.
The question arises if this is a direct effect or whether there are indirect effects of HRM
on psychological contract violation, via perceived employee and/or employer obligations.
Based on the results of the analyses in which the dependent variable is perceived employee
obligations and the analysis in which the dependent variable is perceived employer
obligations (as presented in appendix 3A and 3B), we are able to conclude that there are
indications for a relationship of HRM with employee obligations. This relationship
indicates that the more HRM practices in place, the more employees perceive they have
obligations towards the organization. We did not find indications for such a relationship
between HRM and employer obligations.
5.6 Random intercept model 2
In the second model we estimated we are interested in the relationship between
commitment enhancing HRM (hrmcom) and the degree of psychological contract violation
of individuals. With this model we want to test the second hypothesis: The more
commitment focused HRM, the less psychological contract violation.
Chapter 5 – Results
106
This model is formulated as follows: fulfilij = βoj + β1j(obl_workij) + β2j(obl_orgij) +β3j(age_logij) +β4j(logwfunij) + Rij (5.2a)
Βoj = γ00 + γ 01(logsiz_mj) + γ 02(logfag_mj) + γ 03 (formal_mj) + γ 04(decent_mj) +
γ 05(uncert_mj) + γ 06(sectorj) + γ 07(hrmcom_mj)+ U0j
Results
The results of fitting this random intercept model are presented in the following table.
Table 5-6 Random Intercept Model 2
Model: M2 HRM commitment model Fixed part: Predictor coefficient standard error
Intercept 1.73*** 0.32 Individual level
Obligations employee (obl_work) 0.33*** 0.03 Obligations employer (obl_org) -0.05 0.03 Age employee (age_log) 0.05 0.07 Years of experience in this function (logwfun) -0.08*** 0.02
Organizational level
Size organization (logsiz_m) -0.11*** 0.04 Age organization (logfag_m) 0.11*** 0.03 Degree of formalization (formal_m) -0.08*** 0.02 Degree of decentralization (decent_m) 0.06 0.08
Degree of uncertainty (uncert_m) 0.01 0.05 Sector (sector) 0.06# HRM commitment (hrmcom_m)
0.31 ***
0.11
Random part: Σ2
0.23
0.01
τ00. 0.01 0.00 Tests: -2 Log Likelihood AIC
1742.476 1784.476
* p<0.1 *** p<0.01 ** p< 0.05 # level of significance of F-test
Chapter 5 – Results
107
Interpretation of the output
Fixed part
The parameter estimate of the organizational level explanatory variable commitment
HRM is 0.31, which is significantly positive (at a 1% confidence level). This tells us that a
unit increase in the variable HRM commitment result in an increase of 0.31 in the
dependent variable fulfillment. Stated differently: for a one-point increase in HRM
commitment the average level of violation goes down with 0.31. Because the actual values
of HRM commitment ranged from 1-2.28, the predicted difference between organizations
which do not focus at commitment enhancing systems and organizations which do differ
1.27* 0.31= 0.50 point on the violation score (which is a difference of 13% in degree of
violation).
Random part
In this model we found that the estimated value of the within-group difference σ2 =
0.23 (compared with the baseline model 0.23) and the estimated value of between-group
difference τ00 = 0.01 (compared with the baseline model 0.02). These findings indicate
that including the organizational level variable commitment HRM explains part of the
variance in fulfillment.
Tests
Bases on the t-test and the deviance test (χ2 = 7.401; df=1; p< 0.00), we are able to
reject the null hypothesis. Including the HRM commitment thus adds significantly in
explaining the degree of psychological contract violation, compared to the variables
already included in the baseline-model.
The proportion of total variance explained by this model at organizational level is 0.01.
In comparison with the baseline model, the HRM commitment variable accounts for 29%
of the variance at organizational level that remains after the control variables have been
added. This means that 29% in the variation of psychological contract fulfillment that is
due to organizational level effects can be influenced by the HRM commitment.
Chapter 5 – Results
108
5.7 Random intercept model 3: Configurations
In the third model we estimated we are interested in the relationship between the
coherence of HRM practices and organizational structure in terms of configurations and
the degree of psychological contract violation of individuals. With this model we want to
test the third hypothesis: The more an organization resembles the ideal type, the less
psychological contract violation.
In the previous chapter we discussed how we calculated the distance measure (which
was based on a cluster analysis). This distance measure represents the coherence of an
organization in terms of organizational structure, context and HRM. In this third random
intercept model we examine to which extent this organizational level variable can explain
differences in fulfillment of individuals of different organizations
The third random intercept model can be written as follows: fulfilij = βoj + β1j(obl_workij) + β2j(obl_orgij) +β3j(age_logij) + β4j(logwfunij) + Rij (5.3.a)
Βoj = γ00 + γ 01(logsiz_mj) + γ 02(logfag_mj) + γ 03(sectorj) + γ 04(dis1j)+ U0j
Results
The results of fitting this model are presented in table 5-7.
Interpretation of the output
Fixed part
The parameter estimate of the organizational level explanatory variable distance (dis1)
is -0.03, which is not significant, which was not as expected. Because the t-test of the
distance variable is not significant we are not able to reject the null hypothesis that the
effects of distance on the degree of psychological contract fulfillment do not explain part
of the variance in fulfillment.
Chapter 5 – Results
109
Table 5-7 Random Intercept Model 3
Model: M3 Configurational approach Fixed part: Predictor
coefficient standard error
Intercept 2.01*** 0.32 Individual level
Obligations employee (obl_work) 0.33*** 0.03 Obligations employer (obl_org) -0.05 0.03 Age employee (age_log) 0.04 0.07 Years of experience in this function (logwfun)
-0.09*** 0.02
Organizational level
Size organization (logsiz_m) -0.09** 0.04 Age organization (logfag_m) 0.07*** 0.04 Sector (sector) 0.07# Distance to ideal type cluster (dis1) -0.03 0.04 Random part: Σ2
0.23
0.01
τ00. 0.02 0.01 Tests: -2 Log Likelihood AiC
1757.393 1793.393
* p<0.1 *** p<0.01 ** p< 0.05 # level of significance of F-test
5.8 General model comparisons
In this section we discuss the interpretation of the parameter estimates of the individual
level explanatory variables as well as the control variables of the three models. Next, we
statistically compare the three models. In table 5-8 we provide an overview of the
(significant) estimates of the parameters of the estimated models9.
9 For all models except M3, the main statistical assumption concerning the interdependence and normality of the distribution of random errors (Hofmann et al., 2000) was tested and satisfying.
Cha
pter
5 –
Res
ults
11
0
Tabl
e 5-
8 O
verv
iew
of t
he e
stim
ated
mod
els
Mod
el:
M0:
em
pty
mod
el
Bas
elin
e m
odel
1
Bas
elin
e m
odel
2
M1:
HR
MC
OU
NT
M
2: H
RM
C
omm
itmen
t M
3: C
onfig
urat
iona
l
Fixe
d pa
rt:
Pred
icto
r C
oeff
.
st
. err
or
Coe
ff.
st.e
rror
C
oeff
.
st
.err
or
Coe
ff.
st.e
rror
C
oeff
.
st
.err
or
Coe
ff.
st. e
rror
Inte
rcep
t 2
.94*
**
0.
04
1.9
4***
0.32
1
.70*
**
0.
30
1.9
9***
0.30
1
.73*
**
0.
32
2.0
1***
0.32
In
divi
dual
leve
l
Obl
igat
ions
em
ploy
ee
0
.33*
**
0.
03
0.3
6***
0.03
0
.33*
**
0.
03
0.3
3***
0.03
0
.33*
**
0.
03
Yea
rs o
f wor
k ex
perie
nce
in th
is
func
tion
-0
.08*
**
0.
02
-0.0
8***
0.02
-0
.08*
**
0.
02
-0.0
8***
0.02
-0
.09*
**
0.
02
Org
aniz
atio
nal l
evel
HR
M C
OU
NT
0
.04*
**
0.
01
HR
M C
omm
itmen
t
0
.31*
**
0.
11
D
ista
nce
-0.0
3
0.0
4 D
egre
e of
fo
rmal
izat
ion
-0
.06*
**
0.
02
-0
.10*
**
0.
02
-0.0
8***
0.02
Age
org
aniz
atio
n
n.s.
n.s.
0.1
2* *
*
0.0
3 0
.11*
**
0.
03
0.0
7***
0.04
O
rgan
izat
iona
l siz
e
-0.0
9***
0.04
n.
s. -0
.14*
**
0
.03
-0.1
1***
0.04
-0
.09*
*
0
.04
Ran
dom
par
t:
σ2
0.2
6
0.0
1 0
.23
0
.01
0.2
3
0.0
1 0
.23
0
.01
0.2
3
0.0
1 0
.23
0
.01
τ00.
0
.04
0
.01
0.0
2
0.0
1 0
.03
0
.01
0.0
1
0.0
0 0
.01
0
.00
0.0
2
0.0
1
Tes
ts:
-1 L
og L
ikel
ihoo
d 27
71.5
51
1749
.877
21
91.8
80
1732
.026
17
42.4
76
1757
.393
A
kaik
e’s i
nfor
mat
ion
Crit
erio
n (A
IC)
2777
.551
17
89.8
77
2225
.880
17
74.0
26
1784
.476
17
93.3
93
*
p<0.
1
**
* p<
0.01
**
p<
0.0
5
#
le
vel o
f sig
nific
ance
of F
-test
Chapter 5 – Results
111
Comparison of the three models
To compare the three multi-level models, which are non-nested in structure but are
based upon the same dataset, we can use the general fit index Akaike’s Information
Criterion (AIC), which is a measure that adjusts for the number of parameters estimated
(Hox, 2002: 45). Lower values of AIC are preferred above higher values. Based on this
measure the first model (HRM count) is preferred. This result is in line with our previous
findings, that the amount of variance explained by this model is higher than in the other
models.
Multi-level analyzing versus OLS
As expected, although the estimates of the individual level variables are somewhat
similar, when comparing our results based on multi-level analysis with OLS analysis, the
latter leads to very different results in organizational level variables (as can be seen in
appendix 2). Standard statistics like OLS do not take into account the weighting of the
various organizations, but instead take the average of all organizations, thereby assuming
an intraclass correlation of 0. An intraclass correlation that is greater than 0, as in our case,
indicates that standard statistics would likely lead to misleading results (Singer, 1999:
330). According to Hox (2002:5): “Standard statistical test lean heavily on the assumption
of independence of the observations. If this assumption is violated (and in multilevel data
this is almost always the case) the estimates of the standard errors of conventional
statistical tests are much too small, and this results in many spuriously ‘significant’
results.”
The results on basis of OLS statistics show much higher estimates for the coefficients
of organizational size, age of the organization and degree of formalization. The estimates
of the HRM count and HRM commitment coefficients also show a very different picture
and the distance measure of the third model shows a significant estimate of the coefficient
when using OLS, while this is clearly not the case using multi-level analysis.
Chapter 5 – Results
112
Interpretation of the resulting parameter estimates
Table 5-8 provides us with the (significant) regression coefficients of the explanatory
and control variables. The results are very consistent, although not all outcomes are as
expected. When comparing the three random intercept models M1-M3, the parameter
estimate of the individual level explanatory variable perceived employee obligation is in
all three models 0.33, which is significantly positive (at a 1% confidence level). This tells
us that a unit increase in the variable employee obligation results in an increase of 0.33 in
the dependent variable fulfillment (which is 8.25% of the possible range in fulfillment).
Because the level of employee obligations is measured at a five point scale, the predicted
difference between the person with the lowest level of obligations and the employee with
the highest level of obligations is 1.3 point on their degree of violation.
Based on social exchange theory and notions of balance (see for instance Barksdale &
Shore, 1997) we expected the relationship between the employee and employer obligations
or more specifically the degree of balance between these two parts to have a relationship
with the outcome variable psychological contract violation. Although we found a
significant relationship between employee obligations and degree of fulfillment, we did not
find a relationship between employer obligations and the evaluation of the psychological
contract. Psychological contract obligations reflect future contributions and thus may or
may not be fulfilled and are thus contingent upon the perceived behavior of the other party.
Since fulfillment is associated with perceived employee obligations, this provides an
indication that employee obligations are dependent on the degree to which the organization
has fulfilled its obligations.
The parameter estimate of the individual level control variable years of work
experience in this function is -0.08, which is significantly negative (at a 1% confidence
level). This suggests that the more years of work experience an employee has, the more
psychological contract violation the employee experiences (irrespective of possible
differences in perceived employee obligations and other included variables).
Chapter 5 – Results
113
We found a strong negative relationship with employee obligations (appendix 3A), so
the more years of work experience, the less the employee feels he is owed to provide the
organization with certain things, the more the employee expects from its organization
(appendix 3B). This result is in line with existing literature on tenure, in which employees
perceive reduced obligations when they work longer in the organization.
The regression coefficients of the organizational level control variables of
organizational size and the age of an organization were significant in the three models,
providing support for a relationship between organizational characteristics and degree of
psychological contract fulfillment.
Formalization was found to have a significant relationship with degree of psychological
violation. This result suggests that the more formalized the organization, the more
employees perceive violations of their psychological contract. Although we did not find a
direct effect of decentralization on degree of violation, we found indications of a random
slope of decentralization with employee obligations (as presented in appendix 1). This
suggests that the relationship between perceived employee obligations and psychological
contract violation is moderated by the degree of decentralization. In other words, the
relationship between perceived employee obligations and degree of perceived violation
depends on the degree of decentralization of the structure of the organization.
5.9 Conclusions
The purpose of this chapter was to arrive at a model that is interesting for answering
our main question concerning the relationship between HRM and the degree of
psychological contract violation. In this chapter we developed and tested based on multi-
level analysis three models answering three hypotheses.
The basic condition for handling our data with multi-level statistics was satisfied, in
that there was an amount of variation in our dependent variable (fulfillment) that was due
to organizational level effects (14%).
Chapter 5 – Results
114
We decided to reject the three null-hypotheses based on whether as well the t-test of
significance as the deviance test (which compares the model with its baseline model) were
satisfied. We first developed a model concerning the relationship between the amount of
HRM practices and the degree of psychological contract violation. The parameter estimate
of the explanatory variable of interest (HRM count) was significant and the deviance test
showed that including this variable did significantly add in explaining the degree of
psychological contract violation compared to the variables already included in the
baseline-model. Based on this insight we were able to reject the null-hypothesis. This
means that the more HRM practices organizations, the less psychological contract
violation.
The second model we developed concerned the relationship between commitment
HRM systems and the degree of psychological contract violation. Again (based on a t-test)
the parameter was significant and the deviance test showed that including this variable did
significantly add in explaining the degree of psychological contract violation compared to
the variables already included in the baseline-model. Based on this insight we were able to
reject the null-hypothesis. This means that HRM commitment practices do explain part of
the variance in psychological contract violation (although it explains less than the amount
of HRM practices).
The third model we developed concerned the relationship between the coherence of
structural signals (organizational structure, HRM and context: measured by the distance
variable) and the degree of psychological contract violation. The regression coefficient for
the organizational level explanatory variable (distance) was not significant Based on this
insight, we were not able to reject the null hypothesis that effects of the distance on the
degree of violation of an individual’s psychological contract are absent. In the following
chapter we will elaborate on our findings and their limitations.
Chapter 6 – Discussion
115
CHAPTER 6 DISCUSSION
6.1 Introduction
This study set out to explore the relationship of HRM and more general design factors
with psychological contract violation. Because HRM is the subset of organizational design
characteristics most closely related to the employment relationship the main focus of this
study is on HRM.
Both literature on organizational-level HRM and performance and individual-level
research on the relationship between psychological contract and employee behavior, point
to the existence of a relationship between HRM and the psychological contract of
employees. Most of these indications, however, are conceptually based. Consequently,
various authors explicitly claim there is a need for investigating this relationship.
Investigating mediating constructs in the relationship between HRM and performance such
as the psychological contract can help to understand the mechanisms by which this
relationship is shaped better. In terms of Wright & Nishi (2004) there is a need to open the
“black-box” of the relationship between HRM and performance.
In this study we aim to open this “black box”, by focusing within the relationship
between HRM and performance on the signalling value of HRM and organizational
structure. Besides being instrumental in coordination and control of work in the
organization, we expect HRM and organizational structure to send signals that are relevant
for employees’ assessment of fulfillment of their psychological contracts. Based on a
sample consisting of a cross section of 49 Dutch organizations we study the link between,
on the one hand HRM and other organizational design characteristics, and on the other
hand, psychological contract violation.
Chapter 6 – Discussion
116
Because the constructs of our interest are on different levels (organizational and
individual level), we based our analysis on a modeling technique that takes into account
the dependence between these different levels: multi-level or hierarchical modeling. In
both streams of research applying multi-level modeling and analysis is not common,
although various researchers point to the importance of using this technique.
In this chapter we discuss the results of our study. Our findings indicate that there is a
significant relationship between HRM and organizational design factors and the degree of
perceived psychological contract violation. We first present a short overview of the main
findings of our literature review and our empirical study (section 6.2). Next, we discuss
these findings in detail (section 6.3). In section 6.4 we pay special attention to the
operationalization of the psychological contract in light of exchange theory and notions on
balance. Subsequently the limitations of our study are evaluated and the implications for
future research are addressed (section 6.4). Finally, we address some implications of our
results for management and organizational practice (section 6.5).
6.2 Summary of main findings
6.2.1 Research model and hypotheses
In this study our main interest is in understanding how HRM and more general design
factors are related to performance by looking at the psychological contract of employees.
The psychological contract can be seen as ‘the lens’ through which we study the influence
of HRM and organizational structure on the employment relationship. In line with the
conceptualization of Rousseau (1989/1990/1995), we defined the psychological contract
as: “an individual’s belief, shaped by the organization, regarding reciprocal obligations”.
Based on exchange theory and notions on balance and reciprocity (see chapter 2), we
expect that psychological contracts are contingent upon the perceived behavior of the other
party. Because of reported negative effects of not completely fulfilled psychological
contracts on individual attitudes and behavior, our main focus is on violation of the
psychological contract. We will use the terms violation for indicating a situation in which
employees perceive the obligations of the employer as not being completely fulfilled.
Chapter 6 – Discussion
117
Based on signalling theory, organizations are perceived by employees as sending
signals concerning the employment relationship through HRM and organizational
structure, thereby affecting their psychological contract. Putting insights of both streams of
literature (HRM performance and psychological contract performance) and underlying
theory of social exchange and signalling together, we expect HRM and aspects of
organizational structure to have consequences for the degree of psychological contract
violations of employees.
The main research question is characterized as follows:
What is the signalling value of HRM for employees’ assessment of the degree of violation
of their psychological contracts?
In our analysis of the literature we distinguish the two approaches to HRM for studying
the signalling effect of HRM on the psychological contract: universalistic or ‘best
practices’ approaches and configurational approaches. Universalistic approaches assume a
relationship between HRM regardless of the internal and external organizational context.
Configurational approaches take into account the degree of fit between HRM and its wider
organizational context, thereby recognizing the dependence between organizational level
elements.
These approaches provide different explanations for the signalling effect of HRM and
organizational structure on the psychological contract of employees, leading us to the
development of three hypotheses, of which two hypotheses based on universalistic
approaches (amount of HRM practices and commitment HRM practices) and one
hypothesis on configurational approaches (fit between HRM, structure and context):
H1: The more HRM practices, the less psychological contract violation.
H2: The more commitment focused HRM, the less psychological contract violation.
H3: The more an organization resembles an ideal type, the less psychological contract
violation
Chapter 6 – Discussion
118
The constructs underlying these three hypotheses and their relationships are graphically
presented in our conceptual model (figure 6-1).
Figure 6-1 Conceptual model
Amount of HRMpractices
Commitmentoriented
HRM practices
Fit betweenHRM,
structureand context
Control variables individual level, e.g. age, years of work experience in this function
Employee and employerobligations
Psychologicalcontract violation
Control variables organzational level: e.g. sector, age, size
Organizational
levelIndividuallevel
H1 -/- H2 -/- H3 -/-
In the research model we distinguished two levels of analysis, the organizational and
individual level.
The individual dependent variable is psychological contract violation;
The organizational level independent variables are the amount of HRM practices, the
use of commitment oriented practices and the degree of fit between HRM, structure
and context;
The individual level independent variables are employee and employer obligations.
Based on existing research we include several control variables, both on
organizational and on individual level.
Chapter 6 – Discussion
119
Universalistic approaches
In the first approach, following universalistic HRM thinking, we expect that every
added HRM practice provides additional information that is relevant for employees’
assessment of fulfillment of the organization’s obligations, thus leading to less violation of
these expectations. We operationalized the amount of HRM practices by counting the
number of HRM practices employed by the organization.
Following the second universalistic HRM approach, the ‘best commitment practices’
approach, we expect that violation of the psychological contract can be explained by the
degree to which the organization employs commitment oriented HRM practices. Previous
literature suggests that a subset of HRM practices, the commitment HRM practices, align
the interest of employees and organizations better than other practices do. Commitment
HRM practices are expected to build an intensified and high quality employment
relationship with the objective to optimize organizational performance. Consistent with
this type of research, we defined commitment HRM as an indicator of the attention that
organizations demonstrate for the subset of commitment enhancing practices (such as
social support and training and development).
Configurational approach
The third approach towards studying HRM argues for the importance of coherence or
fit between various internal and external organizational-level element for individual and
organizational performance. The importance of fit is mentioned mainly in conceptual work
on the impact of HRM on the psychological contract.
The essence of the configurational approach is that coherence between organizational
elements is important, that context matters. This approach extends commitment HRM by
focusing on the alignment between commitment HRM, organizational structure (in our
study operationalized by the concepts of formalization and decentralization) and
organizational context (in our study operationalized by the concept of degree of
uncertainty).
Chapter 6 – Discussion
120
Based on the work of Mintzberg (1979), Paauwe (1989), Verburg (1998) and Pichault
& Schoenaers (2003) we develop a model for studying the configurational approach,
focusing on four ideal types (or configurations).
In light of the psychological contract, these four ideal types are expected to send
consistent signals, leading to less violation of psychological contracts, because employees
will have less conflicting expectations of obligations. Coherence between the signals send
by an organization is thus expected to be of importance.
6.2.2 Main results
Because the hypotheses concern constructs of two levels of analysis, namely
organizational level HRM and more general design factors, and individual level
psychological contract, a multi-level approach is used. Multi-level analysis refers to
statistical methods that explicitly take into account the relationships among constructs at
multiple levels of analysis (Klein & Kozlowski, 2000).
The hypotheses are tested by multi-level modeling, regressing the dependent individual
level variable perceived contract violation on the independent individual and
organizational level variables (HRM, organizational structure, perceived employee and
employer obligations), together with a number of control variables. Our findings show that
although psychological contract violation is clearly influenced by individual and job
characteristics, we can conclude that 14% of the variation in degree of psychological
contract violation is due to organizational level effects. Our hypotheses are graphically
presented in figure 6-1. Our findings are summarized below.
Universalistic approaches
In the universalistic approaches towards HRM we expect that regardless of internal and
external context factors HRM has a (negative) relationship with psychological contract
violation. We tested two universalistic approaches with two hypotheses. We first discuss
the hypothesis focusing on the amount of HRM practices.
Chapter 6 – Discussion
121
Figure 6-2 Hypothesis 1: The more HRM practices, the less psychological contract
violation
Amount of HRMpractices
Control variables individual level: years of work experience in this function
Emplyeeobligations
Psychologicalcontract violation
Control variables organzational level: sector, age, size, degree of formalization
Organizational
levelIndividuallevel
-/- 0.04***
-/- 0.33***
The results of our analyses provide strong support for a universalistic perspective. The
parameter estimate of the organizational level explanatory variable representing the
amount of HRM practices is 0.04. Stated differently: for each added HRM practice the
average level of violation goes down with 0.04 (which is 1% of the possible range in
fulfillment). Because the actual values of the scale of the amount of HRM practices ranged
from 3-22, the predicted difference between the organization with the least HRM practices
and organizations with the most HRM practices is (19* 0.04=) 0.76 point on the violation
score (which is a difference of 19 % in degree of fulfillment).
When HRM managers indicated that a greater number of HRM practices were used,
individual employees, regardless of individual characteristics perceived less contract
violation. What these results suggest is that when the organization pays active attention to
HRM by employing many HRM activities, this will lead to less psychological contract
violation on the part of the employees.
Chapter 6 – Discussion
122
The proportion of total variance explained by this model at organizational level is 0.01.
In comparison with the baseline model, the HRM count variable accounts for 62% of the
variance at organizational level that remains after the control variables have been added.
This means that 62% in the variation of psychological contract fulfillment that is due to
organizational level effects can be explained by the amount of HRM practices. We can
conclude that the amount of HRM practices is of importance for explaining variation in
psychological contract violation.
The second hypothesis addressed the relationship between commitment HRM and
degree of perceived psychological contract violation. The results are graphically presented
in figure 6-3.
Figure 6-3 Hypothesis 2: The more commitment focused HRM, the less psychological
contract violation
Control variables individual level: years of work experience in this function
Employeeobligations
Psychologicalcontract violation
Control variables organzational level: sector, age, size, degree of formalization
Organizational
levelIndividuallevel
-/- 0.31***
-/- 0.33***
Commitmentoriented
HRM practices
Chapter 6 – Discussion
123
The results of our analyses also provide support for this perspective. The parameter
estimate of the organizational level explanatory variable representing the amount of HRM
practices is 0.31. This tells us that a unit increase in the variable HRM commitment result
in an increase of 0.31 in the dependent variable fulfillment. Stated differently: for a one-
point increase in HRM commitment the average level of violation goes down with 0.31.
Because the actual values of HRM commitment ranged from 1-2.28, the predicted
difference between organizations which do not focus at commitment enhancing systems
and organizations which do differ 1.27* 0.31= 0.50 point on the violation score (which is a
difference of 13% in degree of violation).
Although the parameter estimated of commitment HRM is higher then the parameter
estimate of the amount of HRM practices, as a result of the range of the scale, the actual
variation in violation associated with commitment HRM is much lower.
When HRM managers indicated that a greater number of commitment HRM practices
were used, individual employees, regardless of individual characteristics perceived less
contract violation. Our findings show thus that commitment enhancing HRM practices
have an impact on the degree to which employees experience psychological contract
violation. However, the focus on commitment explains only about half of the variance in
psychological contract violation that is due to the total amount of HRM practices: 29% of
the variation in psychological contract violation due to organizational level effects was
related to commitment HRM, compared to 62% that was related with the (total) amount of
HRM practices in place.
These results suggest that for a positive evaluation of employees’ psychological
contract it is more important to have a higher amount of HRM practices in place than to
focus specifically on commitment enhancing practices.
Chapter 6 – Discussion
124
Configurational approach
The third hypothesis focused on a configurational approach towards the influence of
HRM and organizational structure on the psychological contract, taking into account the
degree of coherence between organizational level factors that have a signalling function.
Based on theoretically based configurational ideal-types (Simple structure, Machine
bureaucracy, Professional bureaucracy and Adhocracy, see table 6-3), we performed a
cluster-analytical procedure and were able to identify clusters of organizations that
resembled 3 of these ideal types. Due to the nature of our data, in which we did not have
small organizations, we did not find the “Simple Structure” ideal type.
Table 6-3 Ideal types, measurement of four configurations (same as table 3-5, and 4-
12)
For each organization we calculated a variable measuring the distance between the
closest ideal type and the actual situation of the organization. This distance variable
represents the degree of fit or coherence of the organization’s HRM and internal and
external context and is the variable used in our analysis. We expected that greater fit
between these elements, would lead to more consistent messages sent by the organization,
which, in turn, would lead to less violation of employees’ psychological contract. We did
not find support for this hypothesis. The results are graphically presented in figure 6-4.
Chapter 6 – Discussion
125
Figure 6-4 Hypothesis 3: The more an organization resembles the ideal type, the less
psychological contract violation
Control variables individual level: years of work experience in this function
Employeeobligations
Psychologicalcontract violation
Control variables organzational level: sector, age, size
Organizational
levelIndividuallevel
-/- 0.33***
Fit betweenHRM,
structureand context
The results of our study do not show significant relationships between consistency or
fit between various aspects of HRM, organizational structure and context and
psychological contract violation.
Summarizing, we can state that in line with previous research on the relationship
between HRM and performance our findings support a universalistic approach. The results
indicate that the more explicit attention an organization pays to HRM (i.e. the more HRM
practices it has in place), the less employees feel their psychological contract is violated. In
answering our main research question, HRM is significantly associated with psychological
contract violation. This signalling effect stems from the amount of HRM practices in place.
Chapter 6 – Discussion
126
We did not find clear support for the impact of fit between organizational design
elements and the psychological contract violation as was expected in the line of reasoning
of the configurational approach. Furthermore, our findings do not show a strong impact of
commitment oriented HRM as is suggested in literature on commitment HRM. In the
following two subsections we discuss the implications of these findings more in detail.
6.3 Discussion of the findings
Discussion of the findings of the universalistic hypotheses
The universalistic approach concerns the relationship between the amount of HRM
practices in place and the degree of psychological contract violation and the specific focus
of HRM, i.e. commitment and the degree of psychological contract violation. A key
characteristic of a universalistic approach is that regardless of the (internal or external)
context, elements of HRM are expected to have an influence on performance.
Although we found support for both approaches, we found that commitment enhancing
HRM practices explained less than half of the variation in comparison to the model with
the amount of HRM practices. In light of the degree of perceived psychological contract
violation, the explanatory power of commitment HRM is less than the explaining power of
the remaining HRM practices. The findings indicate that an exclusive emphasis on
commitment HRM is insufficient when studying psychological contract violation, as other
elements of HRM explain at least as much of the variance in violation as the commitment
HRM variables.
We discuss two possible reasons for this; one has to do with our operationalization of
commitment HRM, and the other with the diversity of HRM within organizations. The first
explanation for this result might be found in the basis on which we integrated the practices.
We calculated commitment HRM by computing the mean of in total nine HRM practices
which were considered in the literature to be commitment enhancing practices (as training
and development, social support, work design and consultation, organizational
development and development and formulation of social policy).
Chapter 6 – Discussion
127
As a result of this operationalization, commitment HRM is a subset of all possible
HRM practices (in this study: 24 HRM practices) an organization could use. Apparently,
although theoretically not all practices are considered to have such strong effects on work
perceptions and behavior as commitment oriented HRM practices, other practices also
enhance psychological contract fulfillment (for instance practices as staff planning,
recruitment & selection, job classification). In other words, commitment HRM seems to
complement rather than replace the effect of the other HRM practices.
A second explanation of the relatively weak results of the commitment HRM model is
in line with suggestions made by researchers as Delery & Shaw (2001) and Lepak & Snell
(1999). According to these researchers it might be disadvantageous for organizations to
use commitment systems for all employees in all organization. It could be that certain
combinations of practices are especially relevant for specific groups of employees (for
instance core-employees versus contingent workers). Commitment HRM practices are
mostly directed to core employees who are considered to be most of influence on
organizations objectives. Because we did not specifically focus on core-employees and we
have no additional information on this topic we cannot draw inferences on this issue.
Additional analysis might shed some light on this topic.
Bringing these results together we found empirical support for the universalistic
approach, with a significant larger influence of a complete additive index of HRM than for
a subset commitment oriented HRM practices. Our findings indicate that HRM practices
send signals that are relevant for employees’ assessment of fulfillment of their
psychological contracts. Thus every added HRM practice provides employees with more
information, leading to less violation of psychological contracts, because employees will
have more ‘realistic’ expectations of obligations. Thus the more HRM practices, the more
signals or information sent by the organization, the less violation of psychological
contracts.
Chapter 6 – Discussion
128
Discussion of the findings of the configurational hypothesis
The general theoretical idea of the configurational approach was that when there is
alignment between HRM practices, organizational structure and the context of the
organization, the consistency of organizational signalling would lead to less psychological
contract violation.
We investigated the configurational approach by regressing the distance between the
actual situation of the organization and the theoretical optimal situation regarding
organizational features on psychological contract violation. The distance represents the
degree of coherence of the organizational-level dimensions HRM, organizational structure
(formalization and decentralization) and degree of environmental uncertainty. Based on
previous studies, we expected that the lower the distance, the more coherent the signals
send by the organization, the fewer psychological contract violations employees would
perceive.
We did not find any indications for the importance of such an effect. Not only didn’t
we find indications for the existence of a direct effect, we also did not find any indication
of an indirect effect of the degree of coherence of organizational-level elements on
psychological contract violation, i.e. via employee and/or employer obligations (as
presented in appendix 3A and 3B). Also we found no indications for a moderating effect
(based on the random slopes analysis, as presented in appendix 1).
In other words, the results of this study do not support a configurational explanation for
variations in perceptions in psychological contract violation based on our
operationalization of the configurational approach. Various previous empirical studies on
HRM and performance arrived at the same sort of conclusions, in that they also did not
find convincingly results for such a configurational effect on a variety of other
performance measures (see for instance Delery & Doty, 1996).
Chapter 6 – Discussion
129
Considering the possibility that configurational effects might be there, but are difficult
to measure, we discuss two possible explanations for our findings; the first related to the
content of the ideal types, the second related to our operationalizations of the fit measure.
The first explanation of the lack of empirical support could be found in the content of
our ideal types. In general, there is always a trade off with the amount of variables
included in classification scheme’s (see for instance Meyer et al., 1993). Incorporating
multiple variables or dimensions improves the value of the model. When a classification is
made based upon only one or two dimensions it seems not so significant. On the other
hand, when incorporating too many dimensions, the ideal types become very complex to
analyze.
In general we found no clear indications in previous literature on some sort of optimum
number of dimensions to include. In our study we incorporated the dimensions
commitment HRM, decentralization, formalization and degree of environmental
uncertainty. These were the most distinguishing variables that had been regularly used in
previous literature. We thereby excluded other components of Mintzberg’s classification
scheme, such as the age of the organization and the degree of specialization. A more
complete description could possibly lead to different outcomes.
We also could have incorporated more ideal types, such as the missionary organization.
Unfortunately Mintzberg did not fully define these ideal types in a manner commensurate
with the ones we used. Moreover, as results of Doty et al. (1993) suggest, fit is higher in
the ideal types than in the hybrid forms. Another reason for not including for instance the
missionary organization lies in the fact that in this organization HRM operates, unlike in
the ideal-types of our focus, in a more implicit manner based on values that are supposed
to influence employees. We could also have considered other classifications as for instance
Miles & Snow (1984).
Chapter 6 – Discussion
130
Looking more closely at the results of the variables measuring structure and context
(see for instance table 5-8), we can conclude that even though including the three structural
variables seems to be of theoretical importance, it is degree of formalization that has
consistently shown a significant (positive) relationship with psychological contract
violation. The results thus indicate that as a result of more formalization in the
organization, employees experience more psychological contract violation.
We did not find any significant relationships of degree of uncertainty at all. This might
be due to the specific time-period of our data collection. Although previous research found
degree of perceived uncertainty a useful indicator to distinguish ideal typical conditions, at
present perceived uncertainty is high in almost all sectors.
The work of Mintzberg and our measurement of degree of uncertainty stems from a
relatively stable period (before 1980) compared to a later period in which in the
Netherlands there was a flow towards extended market pressures as a result of an
accelerating pace of developments in ICT, globalization processes and trends towards
privatization in non profit organizations. Our sample consist of quite a few organizations
facing these kinds of trends, like big energy companies and organizations working in
health care. As result of this many organizations could have perceived their environment as
highly dynamic and uncertain, that would in previous periods have not. This might have
influenced the absence of a found relationship.
The second explanation for the absence of evidence is associated with our measure of
fit, the distance variable. In our operationalization the underlying constructs have equal
weight; this might not necessarily be the case.
Concluding, although we operationalized our ideal types in a theoretically logical
manner, there is clearly a need for further investigating the practical relevance of the
underlying construct of uncertainty; the dimensions to incorporate and the measure of fit.
Chapter 6 – Discussion
131
Our results provide some indication for reasoning that although fit seems theoretically
an important factor, practically it is very complex to measure and based on our results
there is a question whether fit is of such importance or whether it are foremost the amount
of HRM practices that is of importance, or the attention paid by the organization to
employees.
6.5 Strengths, limitations and suggestions for further research
The aim of our study was to gain more insight into the relationship between HRM and
performance by investigating the relationship between organizational level HRM,
organizational structure variables and the individual level outcome variable perceived
psychological contract violation. Our results provide clear empirical support for the
existence of such a relationship. We find that especially the amount of HRM in place is
clearly related to psychological contract violation. Furthermore we find that aspects of
organizational structure such as the degree of formalization are also significantly related to
the perceptions that employees have of their exchange relationship with the organization.
A major strength of our research is the multi-level nature of our empirical research
design and the use of multi-level analysis. Over the past years, various researchers have
discussed the importance for organization researchers to move from standard statistics to a
multi-level approach. This is particularly of importance when the constructs of interest
exist at different levels. When analyzing such data multi-level techniques are able to take
into account these various levels, leading to better estimates. To investigate the importance
of using multi-level analysis in our study, we compared our findings using OLS with
multi-level outcomes.
When comparing our results based on multi-level analysis with OLS analysis, the latter
leads (as expected) to very different results in organizational level variables (as can be seen
in appendix 2). The results on basis of OLS statistics show for instance much higher
estimates for the coefficients of organizational size, age of the organization and degree of
formalization.
Chapter 6 – Discussion
132
The estimates of the HRM count and HRM commitment coefficients also show a very
different picture and the distance measure of the third model shows a significant estimate
of the coefficient when using OLS, while this is clearly not the case using multi-level
analysis. An important explanation for these results can be found in what was the main
reason for using multi-level analysis in the first place, namely since OLS does not control
for the multi-level nature of the underlying data, it assumes independence of the
observations. As a result of this the standard errors of the estimates using are OLS much
smaller (Hox, 2002:5).
Although these results were as expected, they provide us with the insight that there is
clearly a need for using multi-level theory building an analysis in studies on organizational
behavior, when incorporating constructs on more than one level of analysis.
Notable strengths of our research are not only the multi-level nature of our empirical
research design and the use of multi-level analysis, but also the consistent (as theoretically
expected) findings; the size of our sample; and the estimation of a model capturing 86% of
the organizational level variance of the dependent variable (the influence of omitted
variables on organizational level is not expected to be high in this study).
The results, however, should be interpreted in light of its limitations. In this subsection
we discuss limitations resulting and suggestions for future research.
In this study we measured the ‘HRM practices that were employed regularly.’ As a
result of this, we have no indications on the responsibility of HRM departments or the
degree to which these activities were decentralized to line-managers. As Guest and
Conway (2002: 35) stated it, the presence of a HRM practice does not say anything about
the way is applied in the organization.
Chapter 6 – Discussion
133
The question also rises whether each HRM practices has a similar weight. Furthermore,
as Delery (1998) suggested, in combining the practices in this manner, possible
substitutable and synergetic effects are thereby not captured. Although Delery (1998)
proposed alternative operationalizations, these have problems of their own. For instance,
when multiplying the practices in order to capture synergetic effects, in the case when one
practice is not present in organizations, this would result in a zero score on commitment
HRM. In general, there is no consensus on the basis on which the practices should be
integrated. Future research in this direction is definitely needed. Promising is the
development of alternative statistical methods for uncovering bundles of HRM practices.
Guest et al (2004) for instance use sequential tree analysis for identifying bundles of HRM
practices. Sequential tree analysis is based on a hierarchical way of ordering of the
practices.
There is debate around the measurement of the concept of fit and dimensions to
incorporate to be able to develop meaningful systems of practices and ideal-types.
Considering the theoretical importance of the concept of fit seems contradicted by the
empirical findings, there is clearly a need for future research on this issue.
One of the main assumptions underlying our study is that psychological contract
violation has a strong relationship with individual behavior, as for instance: intention to
leave the organization, loyalty, psychological withdrawal and organizational citizenship
behavior. In other words, within the relationship between HRM and (individual)
performance, psychological contract is seen as a mediating variable. As previous research
provides indications for the existence of such a relationship, our emphasis has been on the
connections between organizational level variables HRM and structure with individuals
perceptions of the psychological contract. Addressing the question whether the
psychological contract as an intermediate variable between HRM and organizational
performance might be considered a manageable explanatory variable has not been the
focus of this study.
Chapter 6 – Discussion
134
Due to the cross-level design of our study we were not able to make statements about
the causality of found relationship, or to control for specific events such as downsizing. As
suggested by several researchers (e.g. Guzzo & Noonan, 1998) employees do not always
actively pay attention to their psychological contract. There are indications that the
psychological contract develops and is adapted mostly in special situations, such as during
performance appraisal and recruitment, but also in the situation of downsizing. It might be
interesting for future researchers to look specifically at these kinds of moments in time and
the impact over time. Longitudinal research would shed more light on these kinds of
issues.
Furthermore, as a result of our study design, we were not able to study the influence on
psychological contract violation over time. As pointed out by Rousseau & Wade-Benzoni
(1994) the investigated relationships might be influenced by time. There might for instance
be a time lag between the promise made or the design of HRM practices at a certain
moment and the promise kept. Also, when HRM practices are in place longer, the
expectation is that the result is more agreement concerning the contract terms and less
violation of the contract (e.g. Rousseau & Wade-Benzoni, 1994). Similarly, the study of
De Vos et al. (2002) provides indications that perceptions of employees regarding
contributions of both parties change during the working period of an employee within one
organization.
Several researchers discussed the shortcomings of the “Rousseau operationalization” of
the psychological contract. Shortcomings mentioned are for instance the amount of
practices included, the way the questions are formulated and the focus on violation of
employer obligations. This could have had an influence on the lack of support we found
for a relationship between employer obligations and perceived psychological contract
fulfillment, since the latter solely focused on the fulfillment of employer obligations. There
are researchers that offer alternative operationalizations (Ten Brink et al., 1999; De Vos et
al., 2003; Van de Brande et al. 2002).
Chapter 6 – Discussion
135
A number of issues that might be of relevance to the relationship between
organizational level HRM and individual level psychological contract could not be
addressed in this study, for instance:
The role of collective agreements between employer and unions. These collective
agreements between trade unions and the organization are part of the institutional
context, but are an important facet of employee relationships or HRM influencing
psychological contract, since they define the degree of dependence between
employees and organizations.
The influence of the leader/ line-manager on the psychological contract and within
the relationship between HRM and the psychological contract (Den Hartog,
Boselie & Paauwe, 2004). Especially considering the tendency towards activities
shifting HRM responsibility to line-manager, this might be an interesting line of
future research.
The results of our study should be interpreted in terms of the previous mentioned
limitations of the study. We hope that future research may replicate our findings, in
different countries, various contract forms and small organizations.
6.6 Suggestions for practice
This study suggests that when an organization pays deliberate attention to HRM,
employees perceive less psychological contract violation. Because previous literature
confirms that perceived psychological contract violation results in undesired behavior,
such as intention to quit the organization, low organizational citizenship behavior, it seems
important for organizations to actively pay attention to managing the psychological
contract through HRM interventions.
Chapter 6 – Discussion
136
The psychological contract is operationalized as a measure reflecting individual
employees’ perceptions of employee and employer obligations, such as employee
obligations to work well with others, voluntarily performing non-required tasks and
working extra hours and employer obligations to provide employees with training and
development possibilities and a good working climate. As a result of more HRM practices
in place, employees perceive they have higher obligations towards the organization.
Furthermore, HRM practices send signals that are relevant for employees’ assessment
of fulfillment of their psychological contracts. Human Resource Management is, therefore,
not only able to provide clarity on the amount of employee obligations, but is also able to
provide clarity about those organizational design elements (as for instance recruitment,
training, reward systems, task structuring), which directly affect the employment
relationship. In this respect HRM is one of the crucial elements (next to for example
leadership style) in managing the psychological contract.
Psychological contracts are most influential (in terms of individual behavior) when
they are violated. Our research suggests that violation can be reduced by actively paying
attention to the employment relationship by developing many explicit HRM activities.
More explicit HRM activities seem to help individual employees to develop expectations
of their employment relationship, which safeguard them against disappointments.
Thus HRM activities seem to have an important signaling function, helping employees
sense what the organization expects of them and what the organization has provided the
employees with in return. As employment relationships are based on reciprocity, employee
behavior is dependent on the behavior of the organization. In this respect it is important to
pay attention to issues of equity and fairness in shaping the employment relationship.
Chapter 6 – Discussion
137
Although more explicit attention to HRM leads to a reduction of psychological contract
violation, organizational formalization leads to more psychological contract violation. Our
data point out that especially in large and/ or highly formalized organizations there is a
danger of a high degree of psychological contract violation, which could result in lower
performance of these employees. At first instance this finding seems to contradict our
previous recommendation of making HRM practices more explicit. However,
formalization here refers to rigidity in organizations due to an emphasis on coordination
and control; rigidity in the application of formal written-down rules. This can easily lead to
psychological contract violation as it leads to a ‘universalistic’ approach to HRM, in the
sense of seeing individuals as members of categories (rather than a ‘particularistic’
approach in the sense of seeing individuals as individuals), which fails to take into account
individual preferences of employees and their specific situations.
This implies a plea for making HRM practices explicit in such a way that they still
allow for individual choice and leeway. Examples in this respect are the development of
labour and working conditions, which allow for choice by individual employees through
web-based menus. (In Dutch: arbeidsvoorwaardenkeuze model, variaties in werktijden,
verlofregelingen etc). So in making as many HR practices as explicit as possible it is
important not to fall into the trap of stretching rigid formalization beyond its relevance.
In contemporary literature special HRM systems as commitment or high performing
work systems are being advocated as of major importance for high individual and
organizational performance. However, this is not supported by our study. Although
commitment HRM activities as social support, training and communication are of
importance for the fulfillment of employees’ psychological contracts, the total amount of
practices is a much better indicator. Advice is, therefore, not just to focus on the
commitment HRM type. The focus of contemporary research on commitment HRM could
well be interpreted as a denial of the relevance of other HRM practices. It is the total
package that counts.
138
Samenvatting (summary in Dutch)
139
SAMENVATTING (SUMMARY IN DUTCH)
Wat bepaalt de effectiviteit van HRM? Deze vraag staat sinds jaren in de
belangstelling. Onderzoek richt zich op twee aspecten hiervan: op organisatieniveau richt
het onderzoek zich op de relatie tussen HRM-activiteiten en organisatieprestatie en op
individueel niveau richt het zich op de relatie tussen individuele karakteristieken, werk
beleving en attitudes en gedrag van medewerkers, zoals intentie de organisatie te verlaten,
tevredenheid en betrokkenheid. Hoewel de focus van HRM ligt op de werknemer-
werkgevers relatie, daar waar deze twee stromen van onderzoek samenkomen, is de relatie
tussen HRM en werkbeleving onderbelicht geweest.
In deze studie slaan we een brug tussen deze twee typen onderzoek door ons te richten
op de relatie tussen HRM en het psychologisch contract van medewerkers. Het
psychologisch contract wordt gedefinieerd als: “de individuele perceptie van wederzijdse
verplichtingen, zoals beïnvloedt door de organisatie”.
Het psychologisch contract omvat drie aspecten:
- gepercipieerde werknemersverplichtingen, zoals de verplichting goed samen te
werken, overuren te maken;
- gepercipieerde werkgeversverplichtingen, zoals medewerkers de ruimte geven
voor training en ontwikkelingen en het bieden van een goed werkklimaat;
- de mate waarin de medewerker het gevoel heeft dat de werkgever tegemoet komt
aan haar verplichtingen (mate van schending van het psychologisch contract ).
Het psychologisch contract kan gezien worden als de lens waardoor we de invloed van
HRM op de arbeidsrelatie bestuderen. Het concept psychologisch contract brengt
onderzoek naar HRM op organisatieniveau en individueel niveau samen, door de focus op
de uitwisselingsrelatie tussen medewerker en organisatie. Het psychologisch contract is
van belang vanwege haar duidelijke relatie met attitudes en gedrag van medewerkers, zoals
vertrouwen en verloop.
Samenvatting (summary in Dutch)
140
Deze studie biedt inzicht in de samenhang tussen HRM, organisatiestructuur,
organisatiecontext en het psychologisch contract. We verkennen de relatie tussen
organisatie- en individuele elementen en het proces waardoor HRM leidt tot effectiviteit.
We veronderstellen interactie tussen medewerker en organisatie op basis van het aantal
HRM activiteiten en de wijze waarop de organisatie HRM heeft ingericht.
Indicaties voor het bestaan van zo een relatie zijn voornamelijk te vinden in
conceptuele werken. Er is weinig empirisch onderzoek dat dit bevestigt. Verschillende
auteurs claimen dan ook dat er een behoefte is om deze relatie verder te onderzoeken
omdat dit ons helpt het proces waardoor de relatie tussen HRM en organisatieprestatie
vormgegeven wordt te begrijpen. Om te spreken met de woorden van Wright & Nishi
(2004) “er is behoefte aan het openen van de “black-box” van de relatie tussen HRM en
organisatieprestatie”.
Onze centrale onderzoeksvraag luidt:
Wat is de signaalwaarde van HRM voor de mate waarin medewerkers schending van hun
psychologisch contract ervaren?
We verwachten dat HRM en elementen van organisatiestructuur communicatiewaarde
hebben, in de zin dat ze signalen uitzenden die relevant zijn voor de evaluatie van
medewerkers over de mate waarin de organisatie tegemoet komt aan haar verplichtingen
(mate van schending van het psychologisch contract). Omdat uit eerder onderzoek blijkt
dat schending van het psychologisch contract het sterkst samenhangt met individuele
prestatie, richten we ons met name op dit element van het psychologisch contract.
We onderzoeken in welke mate twee benaderingen (universalistisch en configuratie)
ons helpen de relatie tussen HRM-signalen en ervaren schending van het psychologisch
contract, te begrijpen. Universalistische benaderingen veronderstellen een relatie ongeacht
de interne en externe organisatie context.
Samenvatting (summary in Dutch)
141
Configuratie benaderingen incorporeren de mate van samenhang (ook wel ‘fit’
genoemd) tussen HRM en haar organisatie context, waarmee het belang van het bestuderen
van de afhankelijkheid tussen verschillende elementen van de organisatie erkend wordt.
Deze benaderingen geven ons verschillende verklaringen voor een signaal effect van
HRM op het psychologisch contract. Dit heeft geleid tot de ontwikkeling van drie
hypothesen, waarvan de eerste twee gebaseerd zijn op de universalistische benadering en
de derde op de configuratie benadering:
H1: Hoe meer HRM activiteiten, hoe minder psychologisch contract schending
H2: Hoe meer commitment-gericht HRM, hoe minder psychologisch contract
schending
H3: Hoe meer de organisatie te classificeren is al een ideaaltype, hoe minder
psychologisch contract schending
In de eerste benadering verwachten we (ongeacht de omgeving) dat met een toenemend
aantal HRM-activiteiten, medewerkers over meer informatie beschikken die relevant is
voor hun begrip van de wederzijdse verplichtingen en de tegemoetkoming van de
organisatieverplichtingen. Dit leidt tot minder ervaren psychologisch contract schending.
De tweede universalistische hypothese richt zich specifiek op commitment
bevorderende HRM-activiteiten. Hierbij verwachten we dat de mate van ervaren
psychologisch contract schending samenhangt met de mate waarin de organisatie
commitment-gerichte HRM activiteiten inzet. In de literatuur bestaan indicaties dat HRM-
activiteiten de doelen van medewerkers en organisatie beter verenigen dan andere
activiteiten. Van commitment HRM-activiteiten wordt verwacht dat zij een intensieve en
hoge kwaliteit arbeidsrelatie opbouwen, wat zal leiden tot minder psychologische contract
schending. We hebben commitment HRM geoperationaliseerd als de mate waarin de
organisatie aandacht schenkt aan activiteiten als sociale ondersteuning en training and
ontwikkeling.
Samenvatting (summary in Dutch)
142
De tweede benadering beargumenteert dat coherentie of fit tussen HRM, interne-
(bijvoorbeeld formalisatie, decentralisatie) en externe organisatie-elementen (bijvoorbeeld
mate van onzekerheid) van belang is voor individuele prestatie en organisatieprestatie. Om
de waarde van deze benadering te bestuderen hebben we op basis van werk van Mintzberg
(1979), Paauwe (1989), Verburg (1998) and Pichault & Schoenaers (2003) een model
ontwikkeld dat bestaat uit vier ideaaltypen. In het licht van het psychologisch contract
verwachten we dat doordat deze vier ideaaltypen duidelijke en op elkaar afgestemde
signalen zenden, er minder sprake zal zijn van ervaren schending van het psychologisch
contract.
Het empirisch onderzoek omvat een steekproef van 49 Nederlandse organisaties
(verschillende industrieën en grootte) en 2099 medewerkers. In de periode 1999-2001
hebben we met hulp van Master studenten aan de Open Universiteit een standaard
vragenlijst uitgezet. Deze Master studenten waren zelf werkzaam in deze 49 organisaties.
De vragenlijst bevatte vragen over werkattitudes en de perceptie van medewerkers van hun
arbeidsrelatie. Daarnaast heeft in elke organisatie de HRM manager een standaardprotocol
ingevuld waarin zijn/haar mening werd gevraagd over de inrichting van de organisatie en
een aantal standaard organisatie-karakteristieken, zoals HRM-activiteiten,
organisatiegrootte, leeftijd van de organisatie, mate van decentralisatie en omvang
personeelsbestand.
Omdat onze constructen (HRM en psychologisch contract) verschillende niveaus
beslaan (organisatie en individueel) hebben we gebruikt gemaakt van een analysetechniek
die rekening houdt met de afhankelijkheid tussen verschillende niveaus: multi-level
modellering en analyse. Afgelopen jaren hebben verschillende wetenschappers het belang
van deze techniek voor dit type onderzoek gepropageerd. Door gebruik te maken van
multi-level modellering en analyse kunnen we meer betrouwbare resultaten laten zien dan
wanneer we onze analyses hadden gebaseerd op standaard statistische methoden (zoals
OLS).
Samenvatting (summary in Dutch)
143
De uitkomsten van onze analyses geven een duidelijke indicatie voor een samenhang
van het aantal HRM-activiteiten en de mate waarin medewerkers schending van hun
psychologisch contract ervaren. Hoe meer HRM-activiteiten, hoe meer werknemers
verplichtingen ten opzichte van de organisatie ervaren en hoe minder er sprake is van
psychologisch contract schending. Dit is een indicatie dat HRM-activiteiten (zoals werving
en selectie, training, beloningssystemen, taakstructurering) signalen afgeven die niet alleen
relevant zijn voor perceptie van medewerkers van de mate waarin de organisatie tegemoet
komt aan haar verplichtingen, maar ook voor de mate waarin de medewerker ervaart dat
hij/zij verplichtingen heeft ten opzichte van de organisatie. Uit de resultaten volgt verder
dat HRM één van de meest cruciale elementen is in het managen van psychologische
contracten.
Hoewel we bevestiging vinden voor beide universalistische benaderingen, zien we dat
vooral het aantal HRM-activiteiten en niet zozeer het specifieke commitment HRM
samenhangt met de mate van ervaren psychologisch contract schending. Deze bevindingen
suggereren dat een exclusieve benadrukking van commitment HRM onvoldoende is om
psychologisch contract schending te verminderen. Hoewel in hedendaags onderzoek HRM
systemen als ‘High Performing Work Systems’ en ‘Commitment enhancing Systems’
worden gezien als belangrijk voor het stimuleren van individuele- en organisatieprestatie,
vinden wij dit dus niet terug in de resultaten van dit onderzoek. Ons advies is te richten op
het totaal aantal HRM activiteiten.
We hebben in deze studie geen bevestiging gevonden voor een samenhang in de mate
van ‘fit’ tussen HRM, organisatie-elementen en psychologisch contract schending. Dit kan
te maken met de problematiek rondom het meten van het concept ‘fit’. Verder onderzoek is
hier nodig.
In het algemeen kunnen we stellen dat meer expliciete aandacht voor HRM-activiteiten
medewerkers helpt realistische verwachtingen ten aanzien van verplichtingen in hun
arbeidsrelatie te ontwikkelen. Hierdoor zullen zij minder vaak teleurgesteld worden in hun
werkgever (psychologisch contract schending).
Samenvatting (summary in Dutch)
144
Omdat eerder onderzoek bevestigt dat psychologisch contract schending zal resulteren
in ongewenst gedrag zoals verloop en verminderende organisatie-identificatie, lijkt het
belangrijk voor organisaties om actief aandacht te besteden aan het managen van
psychologische contracten door het ontwikkelen van veel expliciete HRM-activiteiten.
Dit onderzoek geeft een duidelijke indicatie voor het bestaan van een signaal effect van
HRM, waardoor medewerkers beter in staat zijn te bepalen wat er van hen verwacht wordt
en wat de organisatie hen daarin tegenover stelt/ heeft gesteld. Omdat arbeidsrelaties
gebaseerd zijn op wederkerigheid zal het gedrag van medewerkers afhankelijk zijn van
hetgeen de organisatie biedt. Aandacht binnen organisaties voor het managen van het
psychologisch contract door het inzetten van HRM-activiteiten is dus wenselijk.
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Appendix 1
161
APPENDIX 1: CHECK FOR RANDOM SLOPES Model: M1: HRMCOUNT M2: HRM
Commitment M3: Configurational
Fixed part: Predictor
coeff. st.error
coeff. st.error
coeff. st. error
Intercept 2.13 *** 0.25 2.38*** 0.43 1.83*** 0.47 Individual level
Obligations employee 0.33*** 0.04 0.24** 0.11 0.41*** 0.13 Obligations organization -0.05* 0.03 -0.05* 0.03 -0.05* 0.03 Years of work experience in this function
-0.08** 0.02 -0.08*** 0.02 -0.08*** 0.02
Organizational level
HRM COUNT -0.00 0.04 HRM Commitment -0.19 0.39 Distance 0.09 0.13 Degree of decentralziation -0.30 0.22 -0.28 0.21 Degree of formalization 0.03 0.09 0.03 0.09 Degree of uncertainty 0.02 0.15 0.02 0.15 Organizational size 0.41** 0.16 0.40** 0.15 0.41*** 0.14 Organizational age -0.08 0.11 -0.08 0.10 -0.09 0.10 Sector 0.33# 0.59# 0.59# Random part
obl_work* hrmcou_m 0.01 0.01 obl_work* hrmcom 0.09 0.11 obl_work * dis1 -0.03 0.04 obl_work*logfag_m 0.05* 0.03 0.05* 0.03 0.04 0.03 obl_work*logsize_m -0.14*** 0.04 -0.13*** 0.04 -0.13*** 0.04 obl_work*decent_m 0.11** 0.06 0.11* 0.06 obl_work*formal_m -0.02 0.03 -0.02 0.02 obl_work*uncert_m 0.01 0.04 0.01 0.04 σ2 =var(Rij)
0.23 0.01 0.23 0.01 0.23 0.01
τ00. = var (U0j) 0.06 0.14 0.03 0.14 0.02 0.12 τ11 = var (U1j) -0.01 0.04 -0.01 0.04 -0.01 0.03 τ01 = var (Uoj, U1j) 0.01 0.01 0.00 0.01 0.01 0.01 Test
-2 resticted Log Likelihood10
1921.466 1914.271 1894.917
Akaike’s information Criterion (AIC)
1929.466
1922.271 1902.917
* p<0.1 ** p< 0.05 *** p<0.01 # significance level of F-test
10 For reasons of convergence, these estimates are based upon a restricted a maximum likelihood (REML) procedure, instead of the full maximum likelihood (ML) procedure used in estimating the empty model, the basic models and the random intercept models. As a result of this, the presented estimates of the random slope models can not be used to compare the statistical fit compared to the models estimated with ML.
Appendix 2
162
APPENDIX 2: OLS REGRESSION MODELs Model: M1: HRMCOUNT M2:
HRM Commitment M3: Configurational
Predictor
coeff.11 st.error
coeff. st.error
coeff. st. error
Intercept 1.74*** 0.28 2.28*** 0.30 2.18*** 0.30 Obligations employee 0.28*** 0.03 0.30*** 0.03 0.30*** 0.03 Obligations organization -0.05* 0.03 -0.05* 0.03 -0.06* 0.03 Years of work experience in this function
-0.10*** 0.02 -0.10*** 0.02 -0.11*** 0.02
HRM COUNT 0.41*** 0.06 HRM Commitment 0.26*** 0.08 Distance -0.06** 0.17 Age organization 0.36*** 0.02 0.23*** 0.01 0.14*** 0.01 Organizational size -0.20*** 0.02 -0.10*** 0.02 -0.08** 0.02 Sector : Manufacturing Construction Trade and hotels Transport & Information Professional service Health care Other Public services
n.s. 0.13*** 0.09 0.24*** 0.09 010*** 0.11 0.26*** 0.07 0.22*** 0.07 0.20*** 0.05 n.s.
n.s. 0.10*** 0.09 0.15*** 0.09 0.09** 0.12 0.20*** 0.07 0.20*** 0.08 0.20*** 0.06 n.s.
n.s. 0.10*** 0.09 0.13*** 0.08 n.s. 0.12*** 0.06 0.07** 0.07 n.s. n.s.
Degree of formalization -0.24*** 0.01 -0.17*** 0.01 Degree of decentralization
0.73** 0.03 0.08** 0.03
Degree of uncertainty 0.08** 0.02 n.s. Adjusted R squared 0.202 0.175 0.138
* p<0.1 ** p< 0.05 *** p<0.01
11 Standardized coefficients
Appendix 3A
163
APPENDIX 3A: MODELS WITH DEPENDENT VARIABLE PERCEIVED EMPLOYEE OBLIGATIONS Model: Empty model M1:
HRMCOUNT M2: HRM Commitment
M3: Configurational
Fixed part Predictor
coeff. st. error
oeff. st.error
coeff. st.error
Coeff. st. error
Intercept 3.66*** 0.02 3.32*** 0.25 3.26*** 0.26 3.26*** 0.26 Individual level
Years of work experience in this function
-0.04** 0.02 -0.04** 0.02 -0.09** 0.02
Employee age 0.13** 0.06 0.14** 0.06 0.16** 0.06 Organizational level
HRM COUNT 0.01* 0.01 HRM Commitment 0.06 0.08 Distance 0.00 0.03 Age organization -0.06 0.02 -0.02 0.03 -0.03 0.02 Organizational size 0.01 0.03 0.03 0.03 0.03 0.03 Formalization -0.02 0.02 -0.07 0.02 Decentralization -0.06* 0.04 -0.06 0.04 Uncertainty -0.01 0.02 -0.02 0.03 Sector 0.37# 0.43# 0.40# Random part
σ2 0.21 0.01 0.21 0.01 0.21 0.01 0.21 0.01 τ00. 0.01 0.00 0.00 0.00 0.01 0.00 0.01 0.00 Tests Deviance 2300.036 1577.36 1580.479 1582.617 Akaike’s information Criterion (AIC)
2306.036 1615.36
1618.479 1614.617
* p<0.1 ** p< 0.05 *** p<0.01 # significance level of F-test
Appendix 3B
164
APPENDIX 3B: MODELS WITH DEPENDENT VARIABLE PERCEIVED OBLIGATIONS ORGANIZATION Model: Basic model M1:
HRMCOUNT M2: HRM Commitment
M3: Configurational
Fixed part Predictor
coeff. st. error
coeff. st.error
coeff. st.error
coeff. st. error
Intercept 4.03*** 0.02 3.95*** 0.23 4.00*** 0.24 3.89*** 0.23 Individual level
Employee age 0.04 0.06 0.04 0.06 0.04 0.06 Years of work experience in this function
0.05** 0.02 0.04** 0.02 0.04** 0.02
Organizational level
HRM COUNT -0.00 0.00 HRM Commitment -0.07 0.06 Distance 0.02 0.02 Age organization 0.04** 0.02 0.04** 0.02 0.05** 0.02 Organizational size -0.01 0.02 -0.00 0.02 -0.01 0.02 Formalization -001 0.01 -0.00 0.01 Decentralization -0.00 0.03 0.00 0.03 Uncertainty 0.00 0.02 0.00 0.02 Sector 0.08# 0.11# 0.04# Random part
σ2 0.22 0.01 0.21 0.01 0.21 0.01 0.21 0.01 τ00. 0 01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Test
-2 Log Likelihood 2379.676 1579.472 1578.227 1579.891 Akaike’s information Criterion (AIC)
2385.676 1617.472
1616.227 1611.891
* p<0.1 ** p< 0.05 *** p<0.01 # significance level of F-test
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167
ERASMUS RESEARCH INSTITUTE OF MANAGEMENT (ERIM)
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Keizer, A.B., The Changing Logic of Japanese Employment Practices: A Firm-Level Analysis of Four Industries, Promotors: Prof. dr. J.A. Stam & Prof. dr. J.P.M. Groenewegen, EPS-2005-057-ORG, ISBN: 90-5892-087-9, http://hdl.handle.net/1765/6667 Kippers, J., Empirical Studies on Cash Payments, Promotor: Prof. dr. Ph.H.B.F. Franses, EPS-2004-043-F&A, ISBN 90-5892-069-0, http://hdl.handle.net/1765/1520 Kole, E., On Crises, Crashes and Comovements, Promotors: Prof. dr. C.G. Koedijk & Prof. dr. CM.J.C.M. Verbeek, EPS-2006-083-F&A, ISBN 90-5892-114-X, http://hdl.handle.net/1765/7829 Koppius, O.R., Information Architecture and Electronic Market Performance, Promotors: Prof. dr. P.H.M. Vervest & Prof. dr. ir. H.W.G.M. van Heck, EPS-2002-013-LIS, ISBN: 90-5892-023-2, http://hdl.handle.net/1765/921 Kotlarsky, J., Management of Globally Distributed Component-Based Software Development Projects, Promotor: Prof. dr. K. Kumar, EPS-2005-059-LIS, ISBN: 90-5892-088-7, http://hdl.handle.net/1765/6772 Kuilman, J., The re-emergence of foreign banks in Shanghai: An ecological analysis, Promotor: Prof. dr. B. Krug, EPS-2005-066-ORG, ISBN: 90-5892-096-8, http://hdl.handle.net/1765/6926 Langen, P.W. de, The Performance of Seaport Clusters: A Framework to Analyze Cluster Performance and an Application to the Seaport Clusters of Durban, Rotterdam and the Lower Mississippi, Promotors: Prof. dr. B. Nooteboom & Prof. drs. H.W.H. Welters, EPS-2004-034-LIS, ISBN: 90-5892-056-9, http://hdl.handle.net/1765/1133 Le Anh, T., Intelligent Control of Vehicle-Based Internal Transport Systems, Promotors: Prof. dr. M.B.M. de Koster & Prof. dr. ir. R. Dekker, EPS-2005-051-LIS, ISBN 90-5892-079-8, http://hdl.handle.net/1765/6554 Le-Duc, T., Design and control of efficient order picking processes, Promotor: Prof. dr. M.B.M. de Koster, EPS-2005-064-LIS, ISBN 90-5892-094-1, http://hdl.handle.net/1765/6910 Lentink, R.M., Algorithmic Decision Support for Shunt Planning, Promotors: Prof. dr. L.G. Kroon & Prof. dr. ir. J.A.E.E. van Nunen, EPS-2006-073-LIS, ISBN 90-5892-104-2, http://hdl.handle.net/1765/7328 Liang, G., New Competition: Foreign Direct Investment And Industrial Development In China, Promotor: Prof. dr. R.J.M. van Tulder, EPS-2004-047-ORG, ISBN 90-5892-073-9, http://hdl.handle.net/1765/1795
171
Loef, J., Incongruity between Ads and Consumer Expectations of Advertising, Promotors: Prof. dr. W.F. van Raaij & Prof. dr. G. Antonides, EPS-2002-017-MKT, ISBN: 90-5892-028-3, http://hdl.handle.net/1765/869 Londoño, M. del Pilar, Institutional Arrangements that Affect Free Trade Agreements: Economic Rationality Versus Interest Groups, Promotors: Prof. dr. H.E. Haralambides & Prof. dr. J.F. Francois, EPS-2006-078-LIS, ISBN: 90-5892-108-5, http://hdl.handle.net/1765/7578 Maeseneire, W., de, Essays on Firm Valuation and Value Appropriation, Promotor: Prof. dr. J.T.J. Smit, EPS-2005-053-F&A, ISBN 90-5892-082-8, http://hdl.handle.net/1765/6768 Mandele, L.M., van der, Leadership and the Inflection Point: A Longitudinal Perspective, Promotors: Prof. dr. H.W. Volberda, Prof. dr. H.R. Commandeur, EPS-2004-042-STR, ISBN 90-5892-067-4, http://hdl.handle.net/1765/1302 Meer, J.R. van der, Operational Control of Internal Transport, Promotors: Prof. dr. M.B.M. de Koster & Prof. dr. ir. R. Dekker, EPS-2000-001-LIS, ISBN: 90-5892-004-6, http://hdl.handle.net/1765/859 Mentink, A., Essays on Corporate Bonds, Promotor: Prof. dr. A.C.F. Vorst, EPS-2005-070-F&A, ISBN: 90-5892-100-X, http://hdl.handle.net/1765/7121 Miltenburg, P.R., Effects of Modular Sourcing on Manufacturing Flexibility in the Automotive Industry: A Study among German OEMs, Promotors: Prof. dr. J. Paauwe & Prof. dr. H.R. Commandeur, EPS-2003-030-ORG, ISBN: 90-5892-052-6, http://hdl.handle.net/1765/1039 Moerman, G.A., EmpiricalStudies on Asset Pricing and Banking in the Euro Area, Promotors: Prof. dr. C.G. Koedijk, EPS-2005-058-F&A, ISBN: 90-5892-090-9, http://hdl.handle.net/1765/6666 Mol, M.M., Outsourcing, Supplier-relations and Internationalisation: Global Source Strategy as a Chinese Puzzle, Promotor: Prof. dr. R.J.M. van Tulder, EPS-2001-010-ORG, ISBN: 90-5892-014-3, http://hdl.handle.net/1765/355 Mulder, A., Government Dilemmas in the Private Provision of Public Goods, Promotor: Prof. dr. R.J.M. van Tulder, EPS-2004-045-ORG, ISBN: 90-5892-071-2, http://hdl.handle.net/1765/1790 Muller, A.R., The Rise of Regionalism: Core Company Strategies Under The Second Wave of Integration, Promotor: Prof. dr. R.J.M. van Tulder, EPS-2004-038-ORG, ISBN 90-5892-062-3, http://hdl.handle.net/1765/1272
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Oosterhout, J., van, The Quest for Legitimacy: On Authority and Responsibility in Governance, Promotors: Prof. dr. T. van Willigenburg & Prof.mr. H.R. van Gunsteren, EPS-2002-012-ORG, ISBN: 90-5892-022-4, http://hdl.handle.net/1765/362 Pak, K., Revenue Management: New Features and Models, Promotor: Prof. dr. ir. R. Dekker, EPS-2005-061-LIS, ISBN: 90-5892-092-5, http://hdl.handle.net/1765/362/6771 Peeters, L.W.P., Cyclic Railway Timetable Optimization, Promotors: Prof. dr. L.G. Kroon & Prof. dr. ir. J.A.E.E. van Nunen, EPS-2003-022-LIS, ISBN: 90-5892-042-9, http://hdl.handle.net/1765/429 Pietersz, R., Pricing Models for Bermudan-style Interest Rate Derivatives, Promotors: Prof. dr. A.A.J. Pelsser & Prof. dr. A.C.F. Vorst, EPS-2005-071-F&A, ISBN 90-5892-099-2, http://hdl.handle.net/1765/7122 Popova, V., Knowledge Discovery and Monotonicity, Promotor: Prof. dr. A. de Bruin, EPS-2004-037-LIS, ISBN 90-5892-061-5, http://hdl.handle.net/1765/1201 Pouchkarev, I., Performance Evaluation of Constrained Portfolios, Promotors: Prof. dr. J. Spronk & Dr. W.G.P.M. Hallerbach, EPS-2005-052-F&A, ISBN 90-5892-083-6, http://hdl.handle.net/1765/6731 Puvanasvari Ratnasingam, P., Interorganizational Trust in Business to Business E-Commerce, Promotors: Prof. dr. K. Kumar & Prof. dr. H.G. van Dissel, EPS-2001-009-LIS, ISBN: 90-5892-017-8, http://hdl.handle.net/1765/356 Romero Morales, D., Optimization Problems in Supply Chain Management, Promotors: Prof. dr. ir. J.A.E.E. van Nunen & Dr. H.E. Romeijn, EPS-2000-003-LIS, ISBN: 90-9014078-6, http://hdl.handle.net/1765/865 Roodbergen , K.J., Layout and Routing Methods for Warehouses, Promotors: Prof. dr. M.B.M. de Koster & Prof. dr. ir. J.A.E.E. van Nunen, EPS-2001-004-LIS, ISBN: 90-5892-005-4, http://hdl.handle.net/1765/861 Schweizer, T.S., An Individual Psychology of Novelty-Seeking, Creativity and Innovation, Promotor: Prof. dr. R.J.M. van Tulder. EPS-2004-048-ORG, ISBN: 90-5892-07-71, http://hdl.handle.net/1765/1818 Six, F.E., Trust and Trouble: Building Interpersonal Trust Within Organizations, Promotors: Prof. dr. B. Nooteboom & Prof. dr. A.M. Sorge, EPS-2004-040-ORG, ISBN 90-5892-064-X, http://hdl.handle.net/1765/1271 Slager, A.M.H., Banking across Borders, Promotors: Prof. dr. D.M.N. van Wensveen & Prof. dr. R.J.M. van Tulder, EPS-2004-041-ORG, ISBN 90-5892-066–6, http://hdl.handle.net/1765/1301
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Sloot, L., Understanding Consumer Reactions to Assortment Unavailability, Promotors: Prof. dr. H.R. Commandeur , Prof. dr. E. Peelen & Prof. dr. P.C. Verhoef, EPS-2006-074-MKT, ISBN 90-5892-102-6, http://hdl.handle.net/1765/7438 Smit, W., Market Information Sharing in Channel Relationships: Its Nature, Antecedents and Consequences, Promotors: Prof. dr. H.R. Commandeur , Prof. dr. ir. G.H. van Bruggen & Prof. dr. ir. B. Wierenga, EPS-2006-076-MKT, ISBN 90-5892-106-9, http://hdl.handle.net/1765/7327 Speklé, R.F., Beyond Generics: A closer look at Hybrid and Hierarchical Governance, Promotor: Prof. dr. M.A. van Hoepen RA, EPS-2001-008-F&A, ISBN: 90-5892-011-9, http://hdl.handle.net/1765/357 Teunter, L.H., Analysis of Sales Promotion Effects on Household Purchase Behavior, Promotors: Prof. dr. ir. B. Wierenga & Prof. dr. T. Kloek, EPS-2002-016-ORG, ISBN: 90-5892-029-1, http://hdl.handle.net/1765/868 Valck, K. de, Virtual Communities of Consumption: Networks of Consumer Knowledge and Companionship, Promotors: Prof. dr. ir. G.H. van Bruggen, & Prof. dr. ir. B. Wierenga, EPS-2005-050-MKT, ISBN 90-5892-078-X, http://hdl.handle.net/1765/6663 Verheul, I., Is there a (fe)male approach? Understanding gender differences in entrepreneurship, Prof. dr. A.R. Thurik, EPS-2005-054-ORG, ISBN 90-5892-080-1, http://hdl.handle.net/1765/2005 Vis, I.F.A., Planning and Control Concepts for Material Handling Systems, Promotors: Prof. dr. M.B.M. de Koster & Prof. dr. ir. R. Dekker, EPS-2002-014-LIS, ISBN: 90-5892-021-6, http://hdl.handle.net/1765/866 Vlaar, P.W.L., Making Sense of Formalization in Interorganizational Relationships: Beyond Coordination and Control, Promotors: Prof. dr. ir. F.A.J. Van den Bosch & Prof. dr. H.W. Volberda, EPS-2006-075-STR, ISBN 90-5892-103-4, http://hdl.handle.net/1765/7326 Vliet, P. van, Downside Risk and Empirical Asset Pricing, Promotor: Prof. dr. G.T. Post, EPS-2004-049-F&A, ISBN 90-5892-07-55, http://hdl.handle.net/1765/1819 Vries-van Ketel E. de, How Assortment Variety Affects Assortment Attractiveness: A Consumer Perspective, Promotors: Prof. dr. G.H. van Bruggen, Prof.dr.ir. A.Smidts, EPS-2006-072-MKT, ISBN 90-5892-101-8, http://hdl.handle.net/1765/7193 Vromans, M.J.C.M., Reliability of Railway Systems, Promotors: Prof. dr. L.G. Kroon, Prof. dr. ir. R. Dekker & Prof. dr. ir. J.A.E.E. van Nunen, EPS-2005-062-LIS, ISBN: 90-5892-089-5, http://hdl.handle.net/1765/6773
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Waal, T. de, Processing of Erroneous and Unsafe Data, Promotor: Prof. dr. ir. R. Dekker, EPS-2003-024-LIS, ISBN: 90-5892-045-3, http://hdl.handle.net/1765/870 Wielemaker, M.W., Managing Initiatives: A Synthesis of the Conditioning and Knowledge-Creating View, Promotors: Prof. dr. H.W. Volberda & Prof. dr. C.W.F. Baden-Fuller, EPS-2003-28-STR, ISBN 90-5892-050-X, http://hdl.handle.net/1765/1036 Wijk, R.A.J.L. van, Organizing Knowledge in Internal Networks: A Multilevel Study, Promotor: Prof. dr. ir. F.A.J. van den Bosch, EPS-2003-021-STR, ISBN: 90-5892-039-9, http://hdl.handle.net/1765/347 Wolters, M.J.J., The Business of Modularity and the Modularity of Business, Promotors: Prof. mr. dr. P.H.M. Vervest & Prof. dr. ir. H.W.G.M. van Heck, EPS-2002-011-LIS, ISBN: 90-5892-020-8, http://hdl.handle.net/1765/920
The Signalling Effect of HRM on
Psychological Contracts of EmployeesWhat are the drivers of high performing organizations? During thelast decade, the contribution of HRM to organizational performancehas dominated HRM research and practice. Employees and their rela-tionship with the organization take central stage in this perspectivesince HRM aims to contribute to organizational performance whileoptimizing the relationship between employees and the organiza-tion. However, HRM research has failed to empirically establish thisrelationship.This study fills this important void in HRM research by empiricallyinvestigating the relevance of HRM for the employee-organizationrelationship. In doing so, this study ‘bridges’ two streams of HRMresearch: organizational level research on HRM and performance andindividual level research on employee work perceptions and behavi-oral performance. We focus our attention on the concept of thepsychological contract. The psychological contract is defined as: “anindividual’s belief, shaped by the organization, regarding reciprocalobligations”. The psychological contract connects organizationallevel and individual level perspectives because of its focus on theexchange relationship between organization and the individual.Based on a sample of 49 organizations with 2099 individual respon-dents we investigated the signalling value of HRM for employees’assessment of the degree of violation of their psychological contracts,using a multi-level analytical technique. The findings indicate thatthere is a significant relationship between HRM, organizationaldesign factors and the degree of perceived psychological contractviolation. These findings provide us with one of the first empiricalindications on how HRM leads to effectiveness.
ERIMThe Erasmus Research Institute of Management (ERIM) is the ResearchSchool (Onderzoekschool) in the field of management of the ErasmusUniversity Rotterdam. The founding participants of ERIM are RSMErasmus University and the Erasmus School of Economics. ERIM wasfounded in 1999 and is officially accredited by the Royal NetherlandsAcademy of Arts and Sciences (KNAW). The research undertaken byERIM is focussed on the management of the firm in its environment,its intra- and inter-firm relations, and its business processes in theirinterdependent connections. The objective of ERIM is to carry out first rate research in manage-ment, and to offer an advanced graduate program in Research inManagement. Within ERIM, over two hundred senior researchers andPh.D. candidates are active in the different research programs. From avariety of academic backgrounds and expertises, the ERIM communityis united in striving for excellence and working at the forefront ofcreating new business knowledge.
www.erim.eur.nl ISBN 90-5892-119-0
MARIËLLE SONNENBERG
The Signalling Effect ofHRM on PsychologicalContracts of EmployeesA multi-level perspective
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